Saturday, August 27, 2022

Increase in Jul 2022 of Nonfarm Payroll Jobs by 572 Thousand and Private Payroll Jobs by 471 Thousand In the Global Recession, with Output in the US Reaching a High in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), Twenty Two Million Unemployed or Underemployed in the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Decrease of Inflation Adjusted 12-Month Weekly earnings by 3.5 Percent in Jul 2022, Stagflation, Recession Risk, Worldwide Fiscal, Monetary and External Imbalances, World Cyclical Slow Growth, and Government Intervention in Globalization

 

Increase in Jul 2022 of Nonfarm Payroll Jobs by 572 Thousand and Private Payroll Jobs by 471 Thousand In the Global Recession, with Output in the US Reaching a High in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), Twenty Two Million Unemployed or Underemployed in the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Decrease of Inflation Adjusted 12-Month Weekly earnings by 3.5 Percent in Jul 2022, Stagflation, Recession Risk, Worldwide Fiscal, Monetary and External Imbalances, World Cyclical Slow Growth, and Government Intervention in Globalization

Note: This Blog will post only one indicator of the US economy while we concentrate efforts in completing a book-length manuscript in the critically important subject of INFLATION.

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022.

I Twenty-Two Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide Followed by Lockdown of Economic Activity in the COVID-19 Event

IA1 Summary of the Employment Situation

Section IA2 Number of People in Job Stress

Section IA4 Job Creation

IB Stagnating Real Wages

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

Preamble. United States total public debt outstanding is $30.8 trillion and debt held by the public $24.2 trillion (https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny). The Net International Investment Position of the United States, or foreign debt, is $17.8 trillion at the end of IQ2022 (https://www.bea.gov/sites/default/files/2022-06/intinv122.pdf). The United States current account deficit is 4.8 percent of GDP in IQ2022, increasing from 3.7 percent in IVQ2021 (https://www.bea.gov/sites/default/files/2022-06/trans122.pdf). The Treasury deficit of the United States reached $2.8 trillion in fiscal year 2021 (https://fiscal.treasury.gov/reports-statements/mts/). Total assets of Federal Reserve Banks reached $8.9 trillion on Aug 24, 2022 and securities held outright reached $8.4 trillion (https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1). US GDP nominal NSA reached $24.9 trillion in IIQ2022 (https://apps.bea.gov/iTable/index_nipa.cfm). US GDP contracted at the real seasonally adjusted annual rate (SAAR) of 1.6 percent in IQ2022 and contract at the SAAR of 0.9 percent in IIQ2022 (https://apps.bea.gov/iTable/index_nipa.cfm). Total Treasury interest-bearing, marketable debt held by private investors increased from $3635 billion in 2007 to $16,439 billion in Sep 2021 (Fiscal Year 2021) or increase by 352.2 percent (https://fiscal.treasury.gov/reports-statements/treasury-bulletin/). John Hilsenrath, writing on “Economists Seek Recession Cues in the Yield Curve,” published in the Wall Street Journal on Apr 2, 2022, analyzes the inversion of the Treasury yield curve with the two-year yield at 2.430 on Apr 1, 2022, above the ten-year yield at 2.374. Hilsenrath argues that inversion appears to signal recession in market analysis but not in alternative Fed approach.

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Chart CPI-H, US, Consumer Price Index, 12-Month Percentage Change, NSA, 1981-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/cpi/data.htm

Chart VII-3 of the Energy Information Administration provides the US retail price of regular gasoline. The price increased to $3.880 per gallon on Oct 22, 2022 from $3.145 a year earlier or 23.4 percent.

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Chart VII-3, US Retail Price of Regular Gasoline, Dollars Per Gallon

Source: US Energy Information Administration

https://www.eia.gov/petroleum/weekly/

Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 per million Btu on Jan 4, 2021 to $9.193 per million Btu on Aug 23, 2022 or 256.2 percent.

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Chart VII-4, US, Natural Gas Futures Contract 1

Source: US Energy Information Administration

https://www.eia.gov/dnav/ng/hist/rngc1d.htm

Chart VII-5 of the US Energy Administration provides US field production of oil decreasing from a peak of 12,966 thousand barrels per day in Nov 2019 to the final point of 11.595 thousand barrels per day in May 2022.

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Chart VII-5, US, US, Field Production of Crude Oil, Thousand Barrels Per Day

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M

Chart VII-6 of the US Energy Information Administration provides imports of crude oil. Imports increased from 245,369 thousand barrels per day in Jan 2021 to 252,916 thousand barrels in Jan 2022, moving to 258,538 thousand barrels in May 2022.

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Chart VII-6, US, US, Imports of Crude Oil and Petroleum Products, Thousand Barrels

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUS1&f=M

Chart VI-7 of the EIA provides US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2020. There was sharp increase in production in the final segment that reached consumption in 2020.

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Chart VI-7, US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2020, Million Barrels Per Day

https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php

Chart VI-8 provides the US average retail price of electricity at 12.78 cents per kilowatthour in Dec 2020 increasing to 14.92 cents per kilowatthour in May 2022 or 16.7 per cent.

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Chart VI-8, US Average Retail Price of Electricity, Monthly, Cents per Kilowatthour,

https://www.eia.gov/electricity/data/browser/#/topic/7?agg=0,1&geo=g&endsec=vg&linechart=ELEC.PRICE.US-RES.M~~~&columnchart=ELEC.PRICE.US-ALL.M~ELEC.PRICE.US-RES.M~ELEC.PRICE.US-COM.M~ELEC.PRICE.US-IND.M&map=ELEC.PRICE.US-ALL.M&freq=M&start=200101&end=202205&ctype=linechart&ltype=pin&rtype=s&pin=&rse=0&maptype=0

Chart VII-9 provides the fed funds rate and Three Months, Two-Year and Ten-Year Treasury Constant Maturity Yields. Unconventional monetary policy of near zero interest rates is typically followed by financial and economic stress with sharp increases in interest rates.

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Chart VII-9, US Fed Funds Rate and Three-Month, Two-Year and Ten-Year Treasury Constant Maturity Yields, Jan 2, 1994 to Aug 25, 2022

Source: Federal Reserve Board of the Federal Reserve System

https://www.federalreserve.gov/releases/h15/

Chart VI-14 provides the overnight fed funds rate, the yield of the 10-year Treasury constant maturity bond, the yield of the 30-year constant maturity bond and the conventional mortgage rate from Jan 1991 to Dec 1996. In Jan 1991, the fed funds rate was 6.91 percent, the 10-year Treasury yield 8.09 percent, the 30-year Treasury yield 8.27 percent and the conventional mortgage rate 9.64 percent. Before monetary policy tightening in Oct 1993, the rates and yields were 2.99 percent for the fed funds, 5.33 percent for the 10-year Treasury, 5.94 for the 30-year Treasury and 6.83 percent for the conventional mortgage rate. After tightening in Nov 1994, the rates and yields were 5.29 percent for the fed funds rate, 7.96 percent for the 10-year Treasury, 8.08 percent for the 30-year Treasury and 9.17 percent for the conventional mortgage rate.

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Chart VI-14, US, Overnight Fed Funds Rate, 10-Year Treasury Constant Maturity, 30-Year Treasury Constant Maturity and Conventional Mortgage Rate, Monthly, Jan 1991 to Dec 1996

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/h15/update/

Chart VI-15 of the Bureau of Labor Statistics provides the all items consumer price index from Jan 1991 to Dec 1996. There does not appear acceleration of consumer prices requiring aggressive tightening.

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Chart VI-15, US, Consumer Price Index All Items, Jan 1991 to Dec 1996

Source: Bureau of Labor Statistics

https://www.bls.gov/cpi/data.htm

Chart IV-16 of the Bureau of Labor Statistics provides 12-month percentage changes of the all items consumer price index from Jan 1991 to Dec 1996. Inflation collapsed during the recession from Jul 1990 (III) and Mar 1991 (I) and the end of the Kuwait War on Feb 25, 1991 that stabilized world oil markets. CPI inflation remained almost the same and there is no valid counterfactual that inflation would have been higher without monetary policy tightening because of the long lag in effect of monetary policy on inflation (see Culbertson 1960, 1961, Friedman 1961, Batini and Nelson 2002, Romer and Romer 2004). Policy tightening had adverse collateral effects in the form of emerging market crises in Mexico and Argentina and fixed income markets worldwide.

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Chart VI-16, US, Consumer Price Index All Items, Twelve-Month Percentage Change, Jan 1991 to Dec 1996

Source: Bureau of Labor Statistics

https://www.bls.gov/cpi/data.htm

In his classic restatement of the Keynesian demand function in terms of “liquidity preference as behavior toward risk,” James Tobin (http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1981/tobin-bio.html) identifies the risks of low interest rates in terms of portfolio allocation (Tobin 1958, 86):

“The assumption that investors expect on balance no change in the rate of interest has been adopted for the theoretical reasons explained in section 2.6 rather than for reasons of realism. Clearly investors do form expectations of changes in interest rates and differ from each other in their expectations. For the purposes of dynamic theory and of analysis of specific market situations, the theories of sections 2 and 3 are complementary rather than competitive. The formal apparatus of section 3 will serve just as well for a non-zero expected capital gain or loss as for a zero expected value of g. Stickiness of interest rate expectations would mean that the expected value of g is a function of the rate of interest r, going down when r goes down and rising when r goes up. In addition to the rotation of the opportunity locus due to a change in r itself, there would be a further rotation in the same direction due to the accompanying change in the expected capital gain or loss. At low interest rates expectation of capital loss may push the opportunity locus into the negative quadrant, so that the optimal position is clearly no consols, all cash. At the other extreme, expectation of capital gain at high interest rates would increase sharply the slope of the opportunity locus and the frequency of no cash, all consols positions, like that of Figure 3.3. The stickier the investor's expectations, the more sensitive his demand for cash will be to changes in the rate of interest (emphasis added).”

Tobin (1969) provides more elegant, complete analysis of portfolio allocation in a general equilibrium model. The major point is equally clear in a portfolio consisting of only cash balances and a perpetuity or consol. Let g be the capital gain, r the rate of interest on the consol and re the expected rate of interest. The rates are expressed as proportions. The price of the consol is the inverse of the interest rate, (1+re). Thus, g = [(r/re) – 1]. The critical analysis of Tobin is that at extremely low interest rates there is only expectation of interest rate increases, that is, dre>0, such that there is expectation of capital losses on the consol, dg<0. Investors move into positions combining only cash and no consols. Valuations of risk financial assets would collapse in reversal of long positions in carry trades with short exposures in a flight to cash. There is no exit from a central bank created liquidity trap without risks of financial crash and another global recession. The net worth of the economy depends on interest rates. In theory, “income is generally defined as the amount a consumer unit could consume (or believe that it could) while maintaining its wealth intact” (Friedman 1957, 10). Income, Y, is a flow that is obtained by applying a rate of return, r, to a stock of wealth, W, or Y = rW (Friedman 1957). According to a subsequent statement: “The basic idea is simply that individuals live for many years and that therefore the appropriate constraint for consumption is the long-run expected yield from wealth r*W. This yield was named permanent income: Y* = r*W” (Darby 1974, 229), where * denotes permanent. The simplified relation of income and wealth can be restated as:

W = Y/r (1)

Equation (1) shows that as r goes to zero, r→0, W grows without bound, W→∞. Unconventional monetary policy lowers interest rates to increase the present value of cash flows derived from projects of firms, creating the impression of long-term increase in net worth. An attempt to reverse unconventional monetary policy necessarily causes increases in interest rates, creating the opposite perception of declining net worth. As r→∞, W = Y/r →0. There is no exit from unconventional monetary policy without increasing interest rates with resulting pain of financial crisis and adverse effects on production, investment and employment.

Inflation and unemployment in the period 1966 to 1985 is analyzed by Cochrane (2011Jan, 23) by means of a Phillips circuit joining points of inflation and unemployment. Chart VI-1B for Brazil in Pelaez (1986, 94-5) was reprinted in The Economist in the issue of Jan 17-23, 1987 as updated by the author. Cochrane (2011Jan, 23) argues that the Phillips circuit shows the weakness in Phillips curve correlation. The explanation is by a shift in aggregate supply, rise in inflation expectations or loss of anchoring. The case of Brazil in Chart VI-1B cannot be explained without taking into account the increase in the fed funds rate that reached 22.36 percent on Jul 22, 1981 (http://www.federalreserve.gov/releases/h15/data.htm) in the Volcker Fed that precipitated the stress on a foreign debt bloated by financing balance of payments deficits with bank loans in the 1970s. The loans were used in projects, many of state-owned enterprises with low present value in long gestation. The combination of the insolvency of the country because of debt higher than its ability of repayment and the huge government deficit with declining revenue as the economy contracted caused adverse expectations on inflation and the economy.  This interpretation is consistent with the case of the 24 emerging market economies analyzed by Reinhart and Rogoff (2010GTD, 4), concluding that “higher debt levels are associated with significantly higher levels of inflation in emerging markets. Median inflation more than doubles (from less than seven percent to 16 percent) as debt rises frm the low (0 to 30 percent) range to above 90 percent. Fiscal dominance is a plausible interpretation of this pattern.”

The reading of the Phillips circuits of the 1970s by Cochrane (2011Jan, 25) is doubtful about the output gap and inflation expectations:

“So, inflation is caused by ‘tightness’ and deflation by ‘slack’ in the economy. This is not just a cause and forecasting variable, it is the cause, because given ‘slack’ we apparently do not have to worry about inflation from other sources, notwithstanding the weak correlation of [Phillips circuits]. These statements [by the Fed] do mention ‘stable inflation expectations. How does the Fed know expectations are ‘stable’ and would not come unglued once people look at deficit numbers? As I read Fed statements, almost all confidence in ‘stable’ or ‘anchored’ expectations comes from the fact that we have experienced a long period of low inflation (adaptive expectations). All these analyses ignore the stagflation experience in the 1970s, in which inflation was high even with ‘slack’ markets and little ‘demand, and ‘expectations’ moved quickly. They ignore the experience of hyperinflations and currency collapses, which happen in economies well below potential.”

Yellen (2014Aug22) states that “Historically, slack has accounted for only a small portion of the fluctuations in inflation. Indeed, unusual aspects of the current recovery may have shifted the lead-lag relationship between a tightening labor market and rising inflation pressures in either direction.”

Chart VI-1B provides the tortuous Phillips Circuit of Brazil from 1963 to 1987. There were no reliable consumer price index and unemployment data in Brazil for that period. Chart VI-1B used the more reliable indicator of inflation, the wholesale price index, and idle capacity of manufacturing as a proxy of unemployment in large urban centers.

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Chart VI1-B, Brazil, Phillips Circuit, 1963-1987

Source: ©Carlos Manuel Pelaez, O Cruzado e o Austral: Análise das Reformas Monetárias do Brasil e da Argentina. São Paulo: Editora Atlas, 1986, pages 94-5. Reprinted in: Brazil. Tomorrow’s Italy, The Economist, 17-23 January 1987, page 25.

I Twenty-Two Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide Followed by Lockdown of Economic Activity in the COVID-19 Event. Section IA1 Summary of the Employment Situation provides succinctly the major aspects of employment. Section IA2 Number of People in Job Stress analyzes alternative approaches to measuring job stress. Section IA4 Job Creation provides data and analysis on creation of jobs. Section IB Stagnating Real Wages analyzes cyclically stagnating real wages now declining.

IA1 Summary of the Employment Situation. Table I-1 provides summary statistics of the employment situation report of the BLS. The first four rows provide the data from the establishment report of creation of nonfarm payroll jobs and remuneration of workers (for analysis of the differences in employment between the establishment report and the household survey see Abraham, Haltiwanger, Sandusky and Spletzer 2009). Total nonfarm payroll employment seasonally adjusted (SA) increased 572 thousand in Jul 2022 and private payroll employment increased 471 thousand. The Bureau of Labor Statistics states (https://www.bls.gov/news.release/empsit.nr0.htm): “Our analysis suggests that the net effect of these hurricanes [Harvey and Irma] was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures.” A hurdle in analyzing the labor market is the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). Nonfarm jobs seasonally adjusted increased from 139,048 thousand in Jul 2020 to 146,387 thousand in Jul 2021 and increased to 152,536 thousand in Jul 2022. Private jobs seasonally adjusted increased from 117,537 thousand in Jul 2020 to 124,311 thousand in Jul 2021, increasing to 130,254 thousand in Jul 2022. This situation will continue to challenge measurement (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm) and the return to fuller employment is unpredictable.

Closing the economy to mitigate the infection of COVID-19 could deepen the global recession. Gradual reopening in May-2020 to Jul 2022 is recovering jobs. The number employed in Jul 2022 was 159.067 million (NSA) or 11.752 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 264.012 million in Jul 2022 or by 32.054 million. The number employed increased 8.0 percent from Jul 2007 to Jul 2022 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 13.8 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Jul 2022 would result in 167.647 million jobs (0.635 multiplied by noninstitutional civilian population of 264.012 million). There are effectively 8.580 million fewer jobs in Jun 2022 than in Jul 2007, or 167.647 million minus 159.067 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

There is current interest in past theories of “secular stagnation.” Alvin H. Hansen (1939, 4, 7; see Hansen 1938, 1941; for an early critique see Simons 1942) argues:

“Not until the problem of full employment of our productive resources from the long-run, secular standpoint was upon us, were we compelled to give serious consideration to those factors and forces in our economy which tend to make business recoveries weak and anaemic (sic) and which tend to prolong and deepen the course of depressions. This is the essence of secular stagnation-sick recoveries which die in their infancy and depressions which feed on them-selves and leave a hard and seemingly immovable core of unemployment. Now the rate of population growth must necessarily play an important role in determining the character of the output; in other words, the composition of the flow of final goods. Thus a rapidly growing population will demand a much larger per capita volume of new residential building construction than will a stationary population. A stationary population with its larger proportion of old people may perhaps demand more personal services; and the composition of consumer demand will have an important influence on the quantity of capital required. The demand for housing calls for large capital outlays, while the demand for personal services can be met without making large investment expenditures. It is therefore not unlikely that a shift from a rapidly growing population to a stationary or declining one may so alter the composition of the final flow of consumption goods that the ratio of capital to output as a whole will tend to decline.”

The argument that anemic population growth causes “secular stagnation” in the US (Hansen 1938, 1939, 1941) is as misplaced currently as in the late 1930s (for early dissent see Simons 1942). There is currently population growth in the ages of 16 to 24 years but not enough job creation and discouragement of job searches for all ages (https://cmpassocregulationblog.blogspot.com/2022/03/us-consumer-price-index-increased-79.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-consumer-price-index-increased-75.html). The proper explanation is not in secular stagnation but in cyclically slow growth. Secular stagnation is merely another case of theory without reality with dubious policy proposals. Subsection IA4 Job Creation analyzes the types of jobs created, which are lower paying than earlier. Average hourly earnings in Jul 2022 were $32.27 seasonally adjusted (SA), increasing 5.3 percent not seasonally adjusted (NSA) relative to Jul 2021 and increasing 0.5 percent relative to Jun 2022 seasonally adjusted. The Bureau of Labor Statistics states (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-january-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-february-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-march-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-april-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-may-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-june-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2021.htm https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm) “Similarly, changes in average hourly earnings in recent months must be interpreted with caution. Average hourly earnings of all employees on private nonfarm payrolls declined by 35 cents in June to $29.37, following a decrease of 31 cents in May and a gain of $1.34 in April. The increase in average hourly earnings in April largely reflects the disproportionate number of lower-paid workers who went off payrolls, which put upward pressure on the total private average hourly earnings estimate. Some of these workers returned to payrolls in May and June, and job gains among lower-paid workers put downward pressure on average hourly earnings, though the effect is more muted given the smaller magnitude of employment changes in the past 2 months.” In Jun 2022, average hourly earnings seasonally adjusted were $32.12, increasing 5.2 percent relative to Jun 2021 not seasonally adjusted, and increasing 0.4 percent seasonally adjusted relative to May 2022. In May 2022, average hourly earnings were $31.98, increasing 5.3 percent not seasonally adjusted relative to May 2021 and increasing 0.4 percent seasonally adjusted relative to Apr 2022. These are nominal changes in workers’ wages. The following row “average hourly earnings in constant dollars” provides hourly wages in constant dollars calculated by the BLS or what is called “real wages” adjusted for inflation. Data are available for Jul 2022 because the prices indexes of the BLS for Jul 2022 were released on Aug 10, 2022 (https://www.bls.gov/cpi/), which will be covered in this blog’s comment. Average weekly earnings adjusted for inflation or in constant dollars decreased 3.5 percent in Jul 2022 relative to Jul 2021, decreased 4.1 percent from Jun 2021 to Jun 2022 and decreased 4.1 percent from May 2021 to May 2022 but have been decreasing/stagnating during multiple months. World inflation waves in bouts of risk aversion (https://cmpassocregulationblog.blogspot.com/2022/03/accelerating-inflation-throughout-world.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html) mask declining trend of real wages. The fractured labor market of the US is characterized by high levels of unemployment and underemployment together with cyclically stagnating real wages or wages adjusted for inflation (Section I and earlier https://cmpassocregulationblog.blogspot.com/2022/07/increase-in-jun-2022-of-nonfarm-payroll.html). The following section IB Stagnating Real Wages provides more detailed analysis. Average weekly hours of US workers seasonally adjusted had remained virtually unchanged, moving to 34.6 in May 2022, 34.6 in Jun 2022 and 34.8 in Jul 2022, which could affect additional work on a labor force of 163.960 million SA in Jul 2022. Another headline number widely followed is the unemployment rate or number of people unemployed as percent of the labor force. The unemployment rate calculated in the household survey decreased from 4.0 percent in Jan 2022 to 3.8 percent in Feb 2022, decreasing to 3.6 percent in Mar 2022. The rate jumped to 14.7 percent in Apr 2020, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), decreasing to 13.2 percent in May 2020 and 11.0 percent in Jun 2020. The unemployment rate SA decreased to 10.2 percent in Jul 2020 and 8.4 in Aug 2020. The unemployment rate SA decreased to 7.9 percent in Sep 2020 and 6.9 percent in Oct 2020. The rate decreased to 6.7 percent in Nov 2020, 6.7 percent in Dec 2020, 6.4 percent in Jan 2021, 6.2 percent in Feb 2021, 6.0 percent in Mar 2021, 6.0 percent in Apr 2021, 5.8 percent in May 2021, 5.9 percent in Jun 2021, 5.4 percent in Jul 2021, 5.2 percent in Aug 2021, 4.7 percent in Sep 2021, 4.6 percent in Oct 2021, 4.2 percent in Nov 2021 and 3.9 percent in Dec 2021. The unemployment rate was 4.0 percent in Jan 2022, 3.8 percent in Feb 2022, 3.6 percent in Mar 2022, 3.6 percent in Apr 2022, 3.6 percent in May 2022, 3.6 percent in Jun 2022 and 3.5 percent in Jul 2022. This blog provides with every employment situation report the number of people in the US in job stress or unemployed plus underemployed calculated without seasonal adjustment (NSA) at 21.4 million in Jul 2022 and 21.4 million in Jun 2022. The final row in Table I-1 provides the number in job stress as percent of the actual labor force calculated at 12.2 percent in Jul 2022 and 12.2 percent in Jun 2022.

Table I-1, US, Summary of the Employment Situation Report

 

Jul 2022

Jun 2022

May 2022

New Nonfarm Payroll Jobs

572

398

386

New Private Payroll Jobs

471

404

331

Average Hourly Earnings

$32.27

∆% Jul 22/Jul 21 NSA: 5.3

∆% Jul 22/Jun 22 SA: 0.5

$32.12

∆% Jun 22/Jun 21 NSA: 5.2

∆% Jun 22/May 22 SA: 0.4

$31.98

∆% May 22/May 21 NSA: 5.3

∆% May 22/Apr 22 SA: 0.4

Average Weekly Earnings in Constant Dollars

∆% Jul 22 /Jul 21 NSA: -3.5

∆% Jun 22 /Jun 21 NSA: -4.1

∆% May 22 /May 21 NSA: -4.1

Average Weekly Hours

34.8

34.5 NSA

34.6

34.6 NSA

34.6

34.8 NSA

Unemployment Rate Household Survey % of Labor Force SA

3.5

3.6

3.6

Number in Job Stress Unemployed and Underemployed Blog Calculation

21.4

21.4

21.5

In Job Stress as % Labor Force

12.2

12.2

12.3

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

There is socio-economic stress in the combination of adverse events and cyclical performance:

and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html)

The Bureau of Labor Statistics (BLS) of the US Department of Labor provides both seasonally adjusted (SA) and not-seasonally adjusted (NSA) or unadjusted data with important uses (Bureau of Labor Statistics 2012Feb3; 2011Feb11):

“Most series published by the Current Employment Statistics program reflect a regularly recurring seasonal movement that can be measured from past experience. By eliminating that part of the change attributable to the normal seasonal variation, it is possible to observe the cyclical and other nonseasonal movements in these series. Seasonally adjusted series are published monthly for selected employment, hours, and earnings estimates.”

Requirements of using best available information and updating seasonality factors affect the comparability over time of United States employment data. In the first month of the year, the BLS revises data for several years by adjusting benchmarks and seasonal factors (page 4 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015), which is the case of the data for Jan 2015 released on Feb 6, 2015:

“In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2014. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the unemployment insurance tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2013 forward.

Seasonally adjusted data from January 2010 forward are subject to revision. In addition, data for some series prior to 2010, both seasonally adjusted and unadjusted, incorporate revisions. The total nonfarm employment level for March 2014 was revised upward by 91,000 (+67,000 on a not seasonally adjusted basis, or less than 0.05 percent). The average benchmark revision over the past 10 years was plus or minus 0.3 percent. Table A presents revised total nonfarm employment data on a seasonally adjusted basis for January through

December 2014.

An article that discusses the benchmark and post-benchmark revisions and other technical issues can be accessed through the BLS website at www.bls.gov/web/empsit/cesbmart.pdf.

Information on the data released today also may be obtained by calling (202) 691-6555.”

There are also adjustments of population that affect comparability of labor statistics over time (page 5 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015):

“Effective with data for January 2015, updated population estimates have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population since the previous decennial census. The change in population reflected in the new estimates results from adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. In accordance with usual practice, BLS will not revise the official household survey estimates for December 2014 and earlier months. To show the impact of the population adjustments, however, differences in selected December 2014 labor force series based on the old and new population estimates are shown in table B.”

There are also adjustments of benchmarks and seasonality factors for establishment data that affect comparability over time (page 4 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015):

“In accordance with annual practice, the establishment survey data released today [Feb 6, 2015] have been benchmarked to reflect comprehensive counts of payroll jobs for March 2014. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the unemployment insurance tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2013 forward. Seasonally adjusted data from January 2010 forward are subject to revision. In addition, data for some series prior to 2010, both seasonally adjusted and unadjusted, incorporate revisions.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal factors in the release for Dec 2015 (http://www.bls.gov/news.release/pdf/empsit.pdf):

“Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2011 were subject to revision. The unemployment rates for January 2015 through November 2015 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal factors in the release for Dec 2016 (https://www.bls.gov/news.release/pdf/empsit.pdf):

“Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2012 were subject to revision. The unemployment rates for January 2016 through November 2016 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised establishment data for seasonal and benchmarks in the release for Jan 2016 (http://www.bls.gov/news.release/pdf/empsit.pdf): “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2016 reflect updated population estimates. See the notes beginning on page 4 for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised establishment data for seasonal and benchmarks in the release for Jan 2017 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors using an improved methodology to select models. Also, household survey data for January 2017 reflect updated population estimates. See the notes beginning on page 4 for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal adjustment in the release for Dec 2017 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2013 were subject to revision. The unemployment rates for January 2017 through November 2017 (as originally published and as revised) appear in table A on page 6, along with additional information about the revisions.”

All comparisons over time are affected by yearly adjustments of benchmarks and seasonality factors. All data in this blog comment use revised data released by the BLS (http://www.bls.gov/).

The Bureau of Labor Statistics (BLS) revised household data for seasonal adjustment in the release for Dec 2018 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Revision of Seasonally Adjusted Household Survey Data. Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2014 were subject to revision. The unemployment rates for January 2018 through November 2018 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised payroll establishment data with the release of the estimates for Jan 2019 (https://www.bls.gov/news.release/archives/empsit_02012019.htm): “ Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates. See the notes beginning at the end of this news release for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised the Establishment Survey Data with the release of estimates for Jan 2018 on Feb 20, 2018 (https://www.bls.gov/news.release/pdf/empsit.pdf): “In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2017. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system. In addition, the data were updated to the 2017 North American Industry Classification System (NAICS) from the 2012 NAICS. This update resulted in minor changes to several detailed industries. The normal benchmark process revises not seasonally adjusted data from April 2016 forward and seasonally adjusted data from January 2013 forward. However, some data were also revised further back in their history than normal due to the implementation of 2017 NAICS and other minor technical changes related to rounding and re-aggregation of some series. The total nonfarm employment level for March 2017 was revised upward by 146,000 (+138,000 on a not seasonally adjusted basis, or +0.1 percent). On a not seasonally adjusted basis, the average absolute benchmark revision over the past 10 years is 0.2 percent. The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2017 was revised from +2,055,000 to +2,173,000 (seasonally adjusted). Table A presents revised total nonfarm employment data on a seasonally adjusted basis from January to December 2017. All revised historical establishment survey data are available on the BLS website at www.bls.gov/ces/data.htm. In addition, an article that discusses the benchmark and post-benchmark revisions and other technical issues is available at www.bls.gov/web/empsit/cesbmart.htm.”

The Bureau of Labor Statistics (BLS) informs that “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates. See the notes beginning on page 6 for more information about these changes” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics (BLS) informs that “Revision of Seasonally Adjusted Household Survey Data. Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2015 were subject to revision. The unemployment rates for January 2019 through November 2019 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics informs that “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. In addition, several changes have been made to household survey data, including the annual update of population estimates. See the notes beginning on page 4 for more information” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics informs that “Revision of Seasonally Adjusted Household Survey Data Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2016 were subject to revision. The unemployment rates for January 2020 through November 2020 (as originally published and as revised) appear in table A on page 7, along with additional information about the revisions” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics informs that “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2021 reflect updated population estimates. See the notes at the end of this news release for more information about the revisions” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics informs that “Seasonally adjusted household survey data have been revised using updated seasonal | adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2017 were subject to revision. The unemployment rates for January 2021 through November 2021 (as originally published and as revised) |appear in table A at the end of this news release, along with additional information about the revisions.” (https://www.bls.gov/news.release/pdf/empsit.pdf).

The Bureau of Labor Statistics informs that “Changes to The Employment Situation Data Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2022 reflect updated population estimates. See the notes beginning on page 5 for more information.” (https://www.bls.gov/news.release/pdf/empsit.pdf).

IA2 Number of People in Job Stress. There are two approaches to calculating the number of people in job stress. The first approach consists of calculating the number of people in job stress unemployed or underemployed with the raw data of the employment situation report as in Table I-2. The data are seasonally adjusted (SA). The first three rows provide the labor force and unemployed in millions and the unemployment rate of unemployed as percent of the labor force. There is decrease in the number unemployed from 5.950 million in May 2022 to 5.912 million in Jun 2022. The number unemployed decreased to 5.670 million in Jul 2022. The rate of unemployment did not change from 3.6 percent in May 2022 to 3.6 percent in Jun 2022, decreasing to 3.5 percent in Jul 2022. An important aspect of unemployment is its persistence for more than 27 weeks with 1.067 million in Jul 2022 corresponding to 18.8 percent of the unemployed. The longer the period of unemployment the lower are the chances of finding another job with many long-term unemployed ceasing to search for a job. Another key characteristic of the current labor market is the high number of people trying to subsist with part-time jobs because they cannot find full-time employment or part-time for economic reasons. The BLS explains as follows: “these individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs” (https://www.bls.gov/news.release/pdf/empsit.pdf 2). The number of part-time for economic reasons decreased from 4.328 million in May 2022 to 3.621 million in Jun 2022, increasing to 3.924 million in Jul 2022. Another important fact is the marginally attached to the labor force. The BLS explains as follows: “these individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey” (http://www.bls.gov/news.release/pdf/empsit.pdf 2). The number in job stress unemployed or underemployed of 11.208 million in Jul 2022 consists of:

· 5.670 million unemployed (of whom 1.067 million, or 18.8 percent, unemployed for 27 weeks or more) compared with 5.912 million unemployed in Jun 2022 (of whom 1.336 million, or 22.6 percent, unemployed for 27 weeks or more).

· 3.924 million employed part-time for economic reasons in Jul 2022 (who suffered reductions in their work hours or could not find full-time employment) compared with 3.621 million in Jun 2022.

· 1.614 million who were marginally attached to the labor force in Jul 2022 (who were not in the labor force but wanted and were available for work) compared with 1.541 million in Jun 2022.

Table I-2, US, People in Job Stress, Millions and % SA

 

Jul 2022

Jun 2022

May 2022

Labor Force Millions

163.960

164.023

164.376

Unemployed
Millions

5.670

5.912

5.950

Unemployment Rate (unemployed as % labor force)

3.5

3.6

3.6

Unemployed ≥27 weeks
Millions

1.067

1.336

1.356

Unemployed ≥27 weeks %

18.8

22.6

22.8

Part Time for Economic Reasons
Millions

3.924

3.621

4.328

Marginally
Attached to Labor Force
Millions

1.614

1.541

1.417

Job Stress
Millions

11.208

11.074

11.695

In Job Stress as % Labor Force

6.8

6.8

7.1

Job Stress = Unemployed + Part Time Economic Reasons + Marginally Attached Labor Force

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

Table I-3 repeats the data in Table I-2 but including Feb and additional data. What really matters is the number of people with jobs or the total employed, representing the opportunity for exit from unemployment. The final row of Table I-3 provides people employed as percent of the population or employment to population ratio. The number has remained relatively constant around 59 percent, reaching 60.1 in Nov 2017, 60.1 in Dec 2017, 60.5 in Jul 2018, 60.3 in Aug 2018, 60.4 for Sep 2018, 60.5 in Oct 2018, 60.5 in Nov 2018, 60.6 in Dec 2018, 60.6 in Jan 2019, 60.8 in Feb 2019, 60.7 in Mar 2019, 60.6 in Apr 2019, 60.6 in May 2019, 60.7 in Jun 2019, 60.8 in Jul 2019 and 60.8 in Aug 2019. The employment to population ratio fell from an annual level of 63.1 percent in 2006 to 58.6 percent in 2012, 58.6 percent in 2013 and 59.0 in 2014 with the lowest level at 58.4 percent in 2011. The employment population ratio NSA reached 59.4 in Dec 2015, 59.6 in Dec 2016, 60.0 in Dec 2017, 60.4 in Dec 2018, 60.9 in Dec 2019, 57.3 in Dec 2020 and 59.4 in Dec 2021. The SA level in Table I-3 is 60.0 in Jul 2022.

Table I-3, US, Unemployment and Underemployment, SA, Millions and Percent

 

Jul 2022

Jun 2022

May 2022

Apr 2022

Labor Force

163.960

164.023

164.376

164.046

Participation Rate

62.1

62.2

62.3

62.2

Unemployed

5.670

5.912

5.950

5.941

UNE Rate %

3.5

3.6

3.6

3.6

Part Time Economic Reasons

3.924

3.621

4.328

4.033

Marginally Attached to Labor Force

1.614

1.541

1.417

1.570

In Job Stress

11.208

11.074

11.695

11.544

In Job Stress % Labor Force

6.8

6.8

7.1

7.0

Employed

158.290

158.111

158.426

158.105

Employment % Population

60.0

59.9

60.1

60.0

Job Stress = Unemployed + Part Time Economic Reasons + Marginally Attached Labor Force

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

The balance of this section considers the second approach. Charts I-1 to I-12 explain the reasons for considering another approach to calculating job stress in the US. Chart I-1 of the Bureau of Labor Statistics provides the level of employment in the US from 2001 to 2022. There was a big drop of the number of people employed from 147.315 million at the peak in Jul 2007 (NSA) to 136.809 million at the trough in Jan 2010 (NSA) with 10.506 million fewer people employed. Recovery has been anemic compared with the shallow recession of 2001 that was followed by nearly vertical growth in jobs. The number employed in Jul 2022 was 159.067 million (NSA) or 11.752 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 264.012 million in Jul 2022 or by 32.054 million. The number employed increased 8.0 percent from Jul 2007 to Jul 2022 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 13.8 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Jul 2022 would result in 167.647 million jobs (0.635 multiplied by noninstitutional civilian population of 264.012 million). There are effectively 8.580 million fewer jobs in Jun 2022 than in Jul 2007, or 167.647 million minus 159.067 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

clip_image019

Chart I-1, US, Employed, Thousands, SA, 2001-2022

Source: Bureau of Labor Statistics

https://www.bls.gov/data/

Chart I-2 of the Bureau of Labor Statistics provides 12-month percentage changes of the number of people employed in the US from 2001 to 2022. There was recovery since 2010 but not sufficient to recover lost jobs. Many people in the US who had jobs before the global recession are not working now and many who entered the labor force cannot find employment. There is sharp contraction of employment in Mar and Apr 2020 with recovery in May 2020-Jul 2022 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image020

Chart I-2, US, Employed, 12-Month Percentage Change NSA, 2001-2022

Source: Bureau of Labor Statistics

https://www.bls.gov/data/

The foundation of the second approach derives from Chart I-3 of the Bureau of Labor Statistics providing the level of the civilian labor force in the US. The civilian labor force consists of people who are available and willing to work and who have searched for employment recently. The labor force of the US NSA grew 9.4 percent from 142.828 million in Jan 2001 to 156.255 million in Jul 2009. The civilian labor force is 5.8 percent higher at 165.321 million in Jul 2022 than in Jul 2009, all numbers not seasonally adjusted. Chart I-3 shows the flattening of the curve of expansion of the labor force and its decline in 2010 and 2011. The ratio of the labor force of 154.871 million in Jul 2007 to the noninstitutional population of 231.958 million in Jul 2007 was 66.8 percent while the ratio of the labor force of 165.321 million in Jul 2022 to the noninstitutional population of 264.012 million in Jul 2022 was 62.6 percent. The labor force of the US in Jul 2022 corresponding to 66.8 percent of participation in the population would be 176.360 million (0.668 x 264.012) The difference between the measured labor force in Jul 2022 of 165.321 million and the labor force in Jul 2022 with participation rate of 66.8 percent (as in Jul 2007) of 176.360 million is 11.039 million. The level of the labor force in the US has stagnated and is 11.039 million lower than what it would have been had the same participation rate been maintained. Millions of people have abandoned their search for employment because they believe there are no jobs available for them. Millions lost their employment in the lockdown of economic activity of the COVID-19 event. The key issue is whether the decline in participation of the population in the labor force is the result of people giving up on finding another job in addition to job contraction in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image021

Chart I-3, US, Civilian Labor Force, Thousands, SA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-4 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of the labor force in the US. The rate of growth fell almost instantaneously with the global recession and became negative from 2009 to 2011. The labor force of the US collapsed and did not recover cyclically. Growth in the beginning of the summer originates in younger people looking for jobs in the summer after graduation or during school recess.

clip_image022

Chart I-4, US, Civilian Labor Force, Thousands, NSA, 12-month Percentage Change, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-5 of the Bureau of Labor Statistics provides the labor force participation rate in the US or labor force as percent of the population. The labor force participation rate of the US fell from 66.8 percent in Jan 2001 to 62.6 percent NSA in Jul 2022, all numbers not seasonally adjusted. The annual labor force participation rate for 1979 was 63.7 percent and also 63.7 percent in Nov 1980 during sharp economic contraction. This comparison is further elaborated below. Chart I-5 shows an evident downward trend beginning with the global recession that has continued throughout the recovery beginning in IIIQ2009. The critical issue is whether people left the workforce of the US because they believe there is no longer a job for them and if that number will increase in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image023

Chart I-5, Civilian Labor Force Participation Rate, Percent of Population in Labor Force SA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-6 of the Bureau of Labor Statistics provides the level of unemployed in the US. The number unemployed rose from the trough of 6.272 million NSA in Oct 2006 to the peak of 16.147 million in Jan 2010, declining to 13.400 million in Jul 2012, 12.696 million in Aug 2012 and 11.741 million in Sep 2012. The level unemployed fell to 11.741 million in Oct 2012, 11.404 million in Nov 2012, 11.844 million in Dec 2012, 13.181 million in Jan 2013, 12.500 million in Feb 2013 and 9.984 million in Dec 2013. The level of unemployment reached 6.255 million in Jun 2022, all numbers not seasonally adjusted, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image024

Chart I-6, US, Unemployed, Thousands, SA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-7 of the Bureau of Labor Statistics provides the rate of unemployment in the US or unemployed as percent of the labor force. The rate of unemployment of the US rose from 4.7 percent in Jan 2001 to 6.5 percent in Jun 2003, declining to 4.1 percent in Oct 2006. The rate of unemployment jumped to 10.6 percent in Jan 2010 and declined to 7.6 percent in Dec 2012 but increased to 8.5 percent in Jan 2013 and 8.1 percent in Feb 2013, falling back to 7.3 percent in May 2013 and 7.8 percent in Jun 2013, all numbers not seasonally adjusted. The rate of unemployment not seasonally adjusted stabilized at 7.7 percent in Jul 2013 and fell to 6.5 percent in Dec 2013 and 5.4 percent in Dec 2014. The rate of unemployment NSA decreased to 4.8 percent in Dec 2015 and 4.5 percent in Dec 2016, reaching 3.9 percent in Dec 2017. The NSA rate of unemployment was at 3.7 percent in Dec 2018, 3.4 percent in Dec 2019 and 6.5 percent in Dec 2020. The NSA unemployment rate was 3.7 percent in Dec 2021 and 3.8 percent in Jul 2022 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image025

Chart I-7, US, Unemployment Rate, SA, 2001-2022

Source: Bureau of Labor Statistics

https://www.bls.gov/data/

Chart I-8 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of unemployed. There was a jump of 81.8 percent in Apr 2009 with subsequent decline and negative rates since 2010. On an annual basis, the level of unemployed rose 59.8 percent in 2009 and 26.1 percent in 2008 with increase of 3.9 percent in 2010, decline of 7.3 percent in 2011 and decrease of 9.0 percent in 2012. The annual level of unemployment decreased 8.4 percent in 2013 and fell 16.1 percent in 2014. The annual level of unemployment fell 13.7 percent in 2015 and fell 6.6 percent in 2016, decreasing 9.9 percent in 2017. The level of unemployment decreased 12.4 percent in Dec 2017 relative to a year earlier and decreased 4.0 percent in Dec 2018 relative to a year earlier. The level of unemployment decreased 8.7 percent in Dec 2019 relative to a year earlier. The level of unemployment increased 317.7 percent in Apr 2021 and increased 34.4 percent in Mar 2021 relative to a year earlier in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The level of unemployment decreased 59.0 percent in Apr 2021 relative to a year earlier and decreased 57.0 percent in May 2021 relative to a year earlier. The level of unemployment decreased 45.3 percent in Jun 2021 relative to a year earlier and decreased 45.4 percent in Jul 2021 relative to a year earlier. The level of unemployed decreased 40.0 percent in Sep 2021 relative to a year earlier and decreased 35.1 percent in Oct 2021 relative to a year earlier. The level of unemployment decreased 38.6 percent in Nov 2021 relative to a year earlier and decreased 42.7 percent in Dec 2021 relative to a year earlier. The level of unemployment decreased 32.2 percent in Jul 2022 relative to a year earlier.

clip_image026

Chart I-8, US, Unemployed, 12-month Percentage Change, NSA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-9 of the Bureau of Labor Statistics provides the number of people in part-time occupations because of economic reasons, that is, because they cannot find full-time employment. The number underemployed in part-time occupations not seasonally adjusted rose from 3.732 million in Jan 2001 to 5.270 million in Jan 2004, falling to 3.787 million in Apr 2006. The number underemployed seasonally adjusted jumped to 9.114 million in Nov 2009, falling to 8.171 million in Dec 2011 but increasing to 8.305 million in Jan 2012 and 8.238 million in Feb 2012 but then falling to 7.943 million in Dec 2012 and increasing to 8.099 million in Jul 2013. The number employed part-time for economic reasons seasonally adjusted reached 4.620 million in Dec 2018 and 4.661 million in Nov 2018. Without seasonal adjustment, the number employed part-time for economic reasons reached 9.354 million in Dec 2009, declining to 8.918 million in Jan 2012 and 8.166 million in Dec 2012 but increasing to 8.324 million in Jul 2013. The number employed part-time for economic reasons NSA stood at 7.990 million in Dec 2013, 6.970 million in Dec 2014 and 6.179 million in Dec 2015. The number employed part-time for economic reasons NSA stood at 5.707 million in Dec 2016. The number employed part-time for economic reasons reached 5.060 million in Dec 2017. The level of employed part-time for economic reasons stood at 4.740 million in Dec 2018 and 4.247 million in Dec 2019. The longer the period in part-time jobs the lower are the chances of finding another full-time job. The number of part-time for economic reasons NSA jumped to 10.684 million in Mar 2020 and 6.245 million in Dec 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The level of part-time for economic reasons reached 4.049 million in Dec 2021 and 4.084 million in Jul 2022.

clip_image027

Chart I-9, US, Part-Time for Economic Reasons, Thousands, SA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-10 of the Bureau of Labor Statistics repeats the behavior of unemployment. The 12-month percentage change of the level of people at work part-time for economic reasons jumped 84.7 percent in Mar 2009 and declined subsequently. The declines have been insufficient to reduce significantly the number of people who cannot shift from part-time to full-time employment. On an annual basis, the number of part-time for economic reasons increased 33.5 percent in 2008 and 51.7 percent in 2009, declining 0.4 percent in 2010, 3.5 percent in 2011 and 5.1 percent in 2012. The annual number of part-time for economic reasons decreased 2.3 percent in 2013 and fell 9.1 percent in 2014. The annual number of part-time for economic reasons fell 11.7 percent in 2015 and fell 6.7 percent in 2016. The number of part-time for economic reasons decreased 7.6 percent in Dec 2016 relative to a year earlier. The level of part-time for economic reason fell 11.3 percent in Dec 2017 relative to a year earlier. The level of part-time for economic reasons fell 6.3 percent in Dec 2018 relative to a year earlier and decreased 10.4 percent in Dec 2019 relative to a year earlier. The level of part-time for economic reasons jumped 138.3 percent in Apr 2020 relative to a year earlier and 37.2 percent in Feb 2021 relative to a year earlier in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The level of part-time for economic reasons increased 0.6 percent in Mar 2021 relative to a year earlier and decreased 52.9 percent in Apr 2021 relative to a year earlier, decreasing 51.6 percent in May 2021 relative to a year earlier. The level of part-time for economic reasons decreased 48.0 percent in Jun 2021 relative to a year earlier and decreased 46.3 percent in Jul 2021 relative to a year earlier. The level of part-time for economic reasons decreased 41.4 percent in Aug 2021 relative to a year earlier, decreasing 30.6 percent in Sep 2021 relative to a year earlier, decreasing 35.4 percent in Oct 2021 relative to a year earlier and decreasing 35.9 percent in Nov 2021 relative to a year earlier. The level of part-time for economic reasons decreased 35.2 percent in Dec 2021 and decreased 32.0 percent in 2021 relative to 2020. The level of part-time for economic reasons decreased 11.3 percent in Jul 2022 relative to a year earlier.

clip_image028

Chart I-10, US, Part-Time for Economic Reasons NSA 12-Month Percentage Change, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-11 of the Bureau of Labor Statistics provides the same pattern of the number marginally attached to the labor force jumping to significantly higher levels during the global recession and remaining at historically high levels. The number marginally attached to the labor force not seasonally adjusted increased from 1.295 million in Jan 2001 to 1.691 million in Feb 2004. The number of marginally attached to the labor force fell to 1.299 million in Sep 2006 and increased to 2.609 million in Dec 2010 and 2.800 million in Jan 2011. The number marginally attached to the labor force was 2.540 million in Dec 2011, increasing to 2.809 million in Jan 2012, falling to 2.608 million in Feb 2012. The number marginally attached to the labor force fell to 2.352 million in Mar 2012, 2.363 million in Apr 2012, 2.423 million in May 2012, 2.483 million in Jun 2012, 2.529 million in Jul 2012 and 2.561 million in Aug 2012. The number marginally attached to the labor force fell to 2.517 million in Sep 2012, 2.433 million in Oct 2012, 2.505 million in Nov 2012 and 2.427 million in in Dec 2013. The number marginally attached to the labor force reached 2.260 million in Dec 2014 and 1.833 million in Dec 2015. The number marginally attached to the labor force stood at 1.684 million in Dec 2016. The level marginally attached to the labor force reached 1.623 million in Dec 2017. The level of marginally attached to the labor force stood at 1.556 million in Dec 2018 and 1.246 million in Dec 2019. The level of marginally attached to the labor force reached 2.197 million in Dec 2020. The level of marginally attached to the labor force reached 1.671 million in Dec 2021. The level of marginally attached to the labor force reached 1.614 million in Jul 2022.

clip_image029

Chart I-11, US, Marginally Attached to the Labor Force, Thousands, NSA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Chart I-12 provides 12-month percentage changes of the marginally attached to the labor force from 2001 to 2022. There was a jump of 56.1 percent in May 2009 during the global recession followed by declines in percentage changes but insufficient negative changes. On an annual basis, the number of marginally attached to the labor force increased in four consecutive years: 15.7 percent in 2008, 37.9 percent in 2009, 11.7 percent in 2010 and 3.5 percent in 2011. The number marginally attached to the labor force fell 2.2 percent on annual basis in 2012 but increased 2.9 percent in the 12 months ending in Dec 2012, fell 13.0 percent in the 12 months ending in Jan 2013, falling 10.7 percent in the 12 months ending in May 2013. The number marginally attached to the labor force increased 4.0 percent in the 12 months ending in Jun 2013 and fell 4.5 percent in the 12 months ending in Jul 2013 and 8.6 percent in the 12 months ending in Aug 2013. The annual number of marginally attached to the labor force fell 6.2 percent in 2013 and fell 6.5 percent in 2014. The annual number of marginally attached to the labor force fell 11.4 percent in 2015. The number marginally attached to the labor force fell 7.2 percent in the 12 months ending in Dec 2013 and fell 6.9 percent in the 12 months ending in Dec 2014. The number marginally attached to the labor force fell 18.9 percent in the 12 months ending in Dec 2015 and decreased 8.1 percent in the 12 months ending in Dec 2016. The level of marginally attached to the labor force decreased 3.6 percent in the 12 months ending in Dec 2017. The level of marginally attached to the labor force decreased 4.1 percent in the 12 months ending in Dec 2018 and decreased 19.9 percent in the 12 months ending in Dec 2019. The level of marginally attached to the labor force increased 64.3 percent in the 12 months ending in May 2020 and increased 29.2 percent in the 12 months ending in Mar 2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The level of marginally attached to the labor force decreased 23.9 percent in the 12 months ending in Dec 2021 and decreased 16.1 percent in the 12 months ending in Jul 2022.

clip_image030

Chart I-12, US, Marginally Attached to the Labor Force 12-Month Percentage Change, NSA, 2001-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data/

Table I-4 consists of data and additional calculations using the BLS household survey, illustrating the possibility that the actual rate of unemployment could be 9.0 percent and the number of people in job stress could be around 21.4 million, which is 12.2 percent of the effective labor force. Unemployment increased sharply while employment declined rapidly in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-january-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-february-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-march-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-april-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-may-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-june-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2021.htm https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). There is increasing employment and reduction of unemployment in the gradual return of economic activity in May 2020-Jul 2022. The first column provides for 2006 the yearly average population (POP), labor force (LF), participation rate or labor force as percent of population (PART %), employment (EMP), employment population ratio (EMP/POP %), unemployment (UEM), the unemployment rate as percent of labor force (UEM/LF Rate %) and the number of people not in the labor force (NLF). All data are unadjusted or not-seasonally-adjusted (NSA). The numbers in column 2006 are averages in millions while the monthly numbers for Jul 2021, Jun 2022 and Jul 2022 are in thousands, not seasonally adjusted. The average yearly participation rate of the population in the labor force was in the range of 66.0 percent minimum to 67.1 percent maximum between 2000 and 2006 with the average of 66.4 percent (https://www.bls.gov/data/). Table I-4b provides the yearly labor force participation rate from 1979 to 2022. The objective of Table I-4 is to assess how many people could have left the labor force because they do not think they can find another job. Abraham, Hatiwanger, Sandusky and Spletzer (2016) find that “unemployment duration has a strongly negative effect on the likelihood of subsequent employment.” Row “LF PART 66.2 %” applies the participation rate of 2006, almost equal to the rates for 2000 to 2006, to the noninstitutional civilian population in Jul 2021, Jun 2022 and Jul 2022 to obtain what would be the labor force of the US if the participation rate had not changed. In fact, the participation rate fell to 61.0 percent by Jan 2021 and was 61.7 percent in Dec 2021 and 62.6 percent in Jul 2022, suggesting that many people simply gave up on finding another job. There is also abrupt decrease in employment and increase in unemployment in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. Row “∆ NLF UEM” calculates the number of people not counted in the labor force because they could have given up on finding another job by subtracting from the labor force with participation rate of 66.2 percent (row “LF PART 66.2%”) the labor force estimated in the household survey (row “LF”). Total unemployed (row “Total UEM”) is obtained by adding unemployed in row “∆NLF UEM” to the unemployed of the household survey in row “UEM.” The row “Total UEM%” is the effective total unemployed “Total UEM” as percent of the effective labor force in row “LF PART 66.2%.” The results are that:

  • there are an estimated 9.455 million unemployed in Jul 2022 who are not counted because they left the labor force on their belief they could not find another job (∆NLF UEM), that is, they dropped out of their job searches
  • the total number of unemployed is effectively 15.710 million (Total UEM) and not 6.255 million (UEM) of whom many have been unemployed long term
  • the rate of unemployment is 9.0 percent (Total UEM%) and not 3.8 percent, not seasonally adjusted, or 3.5 percent seasonally adjusted
  • the number of people in job stress is close to 21.408 million by adding the 9.455 million leaving the labor force because they believe they could not find another job, corresponding to 12.2 percent of the effective labor force.

The row “In Job Stress” in Table I-4 provides the number of people in job stress not seasonally adjusted at 21.408 million in Jul 2022, adding the total number of unemployed (“Total UEM”), plus those involuntarily in part-time jobs because they cannot find anything else (“Part Time Economic Reasons”) and the marginally attached to the labor force (“Marginally attached to LF”). The final row of Table I-4 shows that the number of people in job stress is equivalent to 12.2 percent of the labor force in Jul 2022.

The argument that anemic population growth causes “secular stagnation” in the US (Hansen 1938, 1939, 1941) is as misplaced currently as in the late 1930s (for early dissent see Simons 1942). There is currently population growth in the ages of 16 to 24 years but not enough job creation and discouragement of job searches for all ages (https://cmpassocregulationblog.blogspot.com/2022/03/us-consumer-price-index-increased-79.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-consumer-price-index-increased-75.html). This is merely another case of theory without reality with dubious policy proposals. The number of hiring relative to the number unemployed measures the chances of becoming employed. The number of hiring in the US economy has declined by 10 million and does not show signs of increasing in an unusual recovery without hiring Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.0 percent on average in the cyclical expansion in the 52 quarters from IIIQ2009 to IIQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the first estimate of GDP for IIQ2022 (https://www.bea.gov/sites/default/files/2022-07/gdp2q22_adv.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%] or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995, 3.6 percent from IQ1983 to IIQ1995, 3.6 percent from IQ1983 to IIIQ1995, 3.6 percent from IQ1982 to IVQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 53.5 percent. GDP in IIQ2022 would be $24,204.2 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4522.5 billion than actual $19,681.7 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 21.4 million unemployed or underemployed equivalent to actual unemployment/underemployment of 12.2 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (Section I and earlier https://cmpassocregulationblog.blogspot.com/2022/07/increase-in-jun-2022-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). US GDP in IIQ2022 is 18.7 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,681.7 billion in IIQ2022 or 24.8 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Jul 1919 to Jul 2022. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.7546 in Dec 2007 to 161.9734 in Jul 2022. The actual index NSA in Jul 2022 is 101.0232 which is 37.6 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing output grew at average 1.4 percent between Dec 1999 and Dec 2006. Using trend growth of 1.4 percent per year, the index would increase to 130.7495 in Jul 2022. The output of manufacturing at 101.0232 in Jul 2022 is 22.7 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.4159 in Jul 2007 to the low of 84.7149 in Jun 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7149 in Apr 2009 to 101.2764 in Jul 2022 or 19.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6406 in Dec 2007 to 172.8144 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 41.4 percent below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6406 in Dec 2007 to 133.8024 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 24.3 percent below trend under this alternative calculation.

Table I-4, US, Population, Labor Force and Unemployment, NSA

 

2006

Jul 2021

Jun 2022

Jul 2022

POP

229

261.469

263.835

264.012

LF

151

162.817

165.012

165.321

PART%

66.2

62.3

62.5

62.6

EMP

144

153.596

158.678

159.067

EMP/POP%

62.9

58.7

60.1

60.2

UEM

7

9.221

6.334

6.255

UEM/LF Rate%

4.6

5.7

3.8

3.8

NLF

77

98.653

98.822

98.690

LF PART 66.2%

  

173.092

174.659

174.776

∆NLF UEM

  

10.275

9.647

9.455

Total UEM

  

19.496

15.981

15.710

Total UEM%

  

11.3

9.2

9.0

Part Time Economic Reasons

  

4.605

3.838

4.084

Marginally Attached to LF

  

1.923

1.541

1.614

In Job Stress

  

26.024

21.360

21.408

People in Job Stress as % Labor Force

  

15.0

12.2

12.2

Pop: population; LF: labor force; PART: participation; EMP: employed; UEM: unemployed; NLF: not in labor force; ∆NLF UEM: additional unemployed; Total UEM is UEM + ∆NLF UEM; Total UEM% is Total UEM as percent of LF PART 66.2%; In Job Stress = Total UEM + Part Time Economic Reasons + Marginally Attached to LF

Note: the first column for 2006 is in average millions; the remaining columns are in thousands; NSA: not seasonally adjusted

The labor force participation rate of 66.2% in 2006 is applied to current population to obtain LF PART 66.2%; ∆NLF UEM is obtained by subtracting the labor force with participation of 66.2 percent from the household survey labor force LF; Total UEM is household data unemployment plus ∆NLF UEM; and total UEM% is total UEM divided by LF PART 66.2%

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

The labor force participation rate of 66.2% in 2006 is applied to current population to obtain LF PART 66.2%; ∆NLF UEM is obtained by subtracting the labor force with participation of 66.2 percent from the household survey labor force LF; Total UEM is household data unemployment plus ∆NLF UEM; and total UEM% is total UEM divided by LF PART 66.2%

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

In the analysis of Hansen (1939, 3) of secular stagnation, economic progress consists of growth of real income per person driven by growth of productivity. The “constituent elements” of economic progress are “(a) inventions, (b) the discovery and development of new territory and new resources, and (c) the growth of population” (Hansen 1939, 3). Secular stagnation originates in decline of population growth and discouragement of inventions. According to Hansen (1939, 2), US population grew by 16 million in the 1920s but grew by one half or about 8 million in the 1930s with forecasts at the time of Hansen’s writing in 1938 of growth of around 5.3 million in the 1940s. Hansen (1939, 2) characterized demography in the US as “a drastic decline in the rate of population growth. Hansen’s plea was to adapt economic policy to stagnation of population in ensuring full employment. In the analysis of Hansen (1939, 8), population caused half of the growth of US GDP per year. Growth of output per person in the US and Europe was caused by “changes in techniques and to the exploitation of new natural resources.” In this analysis, population caused 60 percent of the growth of capital formation in the US. Declining population growth would reduce growth of capital formation. Residential construction provided an important share of growth of capital formation. Hansen (1939, 12) argues that market power of imperfect competition discourages innovation with prolonged use of obsolete capital equipment. Trade unions would oppose labor-savings innovations. The combination of stagnating and aging population with reduced innovation caused secular stagnation. Hansen (1939, 12) concludes that there is role for public investments to compensate for lack of dynamism of private investment but with tough tax/debt issues.

The current application of Hansen’s (1938, 1939, 1941) proposition argues that secular stagnation occurs because full employment equilibrium can be attained only with negative real interest rates between minus 2 and minus 3 percent. Professor Lawrence H. Summers (2013Nov8) finds that “a set of older ideas that went under the phrase secular stagnation are not profoundly important in understanding Japan’s experience in the 1990s and may not be without relevance to America’s experience today” (emphasis added). Summers (2013Nov8) argues there could be an explanation in “that the short-term real interest rate that was consistent with full employment had fallen to -2% or -3% sometime in the middle of the last decade. Then, even with artificial stimulus to demand coming from all this financial imprudence, you wouldn’t see any excess demand. And even with a relative resumption of normal credit conditions, you’d have a lot of difficulty getting back to full employment.” The US economy could be in a situation where negative real rates of interest with fed funds rates close to zero as determined by the Federal Open Market Committee (FOMC) do not move the economy to full employment or full utilization of productive resources. Summers (2013Oct8) finds need of new thinking on “how we manage an economy in which the zero nominal interest rates is a chronic and systemic inhibitor of economy activity holding our economies back to their potential.”

Former US Treasury Secretary Robert Rubin (2014Jan8) finds three major risks in prolonged unconventional monetary policy of zero interest rates and quantitative easing: (1) incentive of delaying action by political leaders; (2) “financial moral hazard” in inducing excessive exposures pursuing higher yields of risker credit classes; and (3) major risks in exiting unconventional policy. Rubin (2014Jan8) proposes reduction of deficits by structural reforms that could promote recovery by improving confidence of business attained with sound fiscal discipline.

Professor John B. Taylor (2014Jan01, 2014Jan3) provides clear thought on the lack of relevance of Hansen’s contention of secular stagnation to current economic conditions. The application of secular stagnation argues that the economy of the US has attained full-employment equilibrium since around 2000 only with negative real rates of interest of minus 2 to minus 3 percent. At low levels of inflation, the so-called full-employment equilibrium of negative interest rates of minus 2 to minus 3 percent cannot be attained and the economy stagnates. Taylor (2014Jan01) analyzes multiple contradictions with current reality in this application of the theory of secular stagnation:

  • Secular stagnation would predict idle capacity, in particular in residential investment when fed fund rates were fixed at 1 percent from Jun 2003 to Jun 2004. Taylor (2014Jan01) finds unemployment at 4.4 percent with house prices jumping 7 percent from 2002 to 2003 and 14 percent from 2004 to 2005 before dropping from 2006 to 2007. GDP prices doubled from 1.7 percent to 3.4 percent when interest rates were low from 2003 to 2005.
  • Taylor (2014Jan01, 2014Jan3) finds another contradiction in the application of secular stagnation based on low interest rates because of savings glut and lack of investment opportunities. Taylor (2009) shows that there was no savings glut. The savings rate of the US in the past decade is significantly lower than in the 1980s.
  • Taylor (2014Jan01, 2014Jan3) finds another contradiction in the low ratio of investment to GDP currently and reduced investment and hiring by US business firms.
  • Taylor (2014Jan01, 2014Jan3) argues that the financial crisis and global recession were caused by weak implementation of existing regulation and departure from rules-based policies.
  • Taylor (2014Jan01, 2014Jan3) argues that the recovery from the global recession was constrained by a change in the regime of regulation and fiscal/monetary policies.

In revealing research, Edward P. Lazear and James R. Spletzer (2012JHJul22) use the wealth of data in the valuable database and resources of the Bureau of Labor Statistics (https://www.bls.gov/data/) in providing clear thought on the nature of the current labor market of the United States. The critical issue of analysis and policy currently is whether unemployment is structural or cyclical. Structural unemployment could occur because of (1) industrial and demographic shifts and (2) mismatches of skills and job vacancies in industries and locations. Consider the aggregate unemployment rate, Y, expressed in terms of share si of a demographic group in an industry i and unemployment rate yi of that demographic group (Lazear and Spletzer 2012JHJul22, 5-6):

Y = ∑isiyi (1)

This equation can be decomposed for analysis as (Lazear and Spletzer 2012JHJul22, 6):

∆Y = ∑i∆siy*i + ∑i∆yis*i (2)

The first term in (2) captures changes in the demographic and industrial composition of the economy ∆si multiplied by the average rate of unemployment y*i , or structural factors. The second term in (2) captures changes in the unemployment rate specific to a group, or ∆yi, multiplied by the average share of the group s*i, or cyclical factors. There are also mismatches in skills and locations relative to available job vacancies. A simple observation by Lazear and Spletzer (2012JHJul22) casts intuitive doubt on structural factors: the rate of unemployment jumped from 4.4 percent in the spring of 2007 to 10 percent in October 2009. By nature, structural factors should be permanent or occur over relative long periods. The revealing result of the exhaustive research of Lazear and Spletzer (2012JHJul22) is:

“The analysis in this paper and in others that we review do not provide any compelling evidence that there have been changes in the structure of the labor market that are capable of explaining the pattern of persistently high unemployment rates. The evidence points to primarily cyclic factors.”

Table I-4b and Chart I-12-b provide the US labor force participation rate or percentage of the labor force in population. It is not likely that simple demographic trends caused the sharp decline during the global recession and failure to recover earlier levels. The civilian labor force participation rate dropped from the peak of 66.9 percent in Jul 2006 to 62.6 percent in Dec 2013, 62.5 percent in Dec 2014, 62.4 percent in Dec 2015 and 62.4 in Dec 2016. The civilian labor force participation rate reached 62.4 in Dec 2017, and 63.1 percent in 2019. The civilian labor force participation rate was at 62.9 percent in Nov 2018 and 62.8 percent in Dec 2018. The civilian labor force participation was 63.0 in Dec 2019. The civilian labor force participation rate was 61.3 in Dec 2020. The civilian labor force participation rate was 61.7 percent in Dec 2021. The civilian labor force participation rate was 62.6 in Jul 2022. The civilian labor force participation rate was 63.7 percent on an annual basis in 1979 and 63.4 percent in Dec 1980 and Dec 1981, reaching even 62.9 percent in both Apr and May 1979. The civilian labor force participation rate jumped with the recovery to 64.8 percent on an annual basis in 1985 and 65.9 percent in Jul 1985. Structural factors cannot explain these sudden changes vividly shown visually in the final segment of Chart I-12b. Seniors would like delay their retiring especially because of the adversities of financial repression on their savings. Labor force statistics are capturing the disillusion of potential workers with their chances in finding a job in what Lazear and Spletzer (2012JHJul22) characterize as accentuated cyclical factors. The argument that anemic population growth causes “secular stagnation” in the US (Hansen 1938, 1939, 1941) is as misplaced currently as in the late 1930s (for early dissent see Simons 1942). There is currently population growth in the ages of 16 to 24 years but not enough job creation and discouragement of job searches for all ages (https://cmpassocregulationblog.blogspot.com/2022/03/us-consumer-price-index-increased-79.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-consumer-price-index-increased-75.html). “Secular stagnation” would be a process over many years and not from one year to another. This is merely another case of theory without reality with dubious policy proposals.

Table I-4b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2022

Year

Mar

Apr

May

Jun

Jul

Dec

Annual

1979

63.2

62.9

62.9

64.5

64.9

63.8

63.7

1980

63.2

63.2

63.5

64.6

65.1

63.4

63.8

1981

63.5

63.6

63.9

64.6

65.0

63.4

63.9

1982

63.4

63.3

63.9

64.8

65.3

63.8

64.0

1983

63.3

63.2

63.4

65.1

65.4

63.8

64.0

1984

63.6

63.7

64.3

65.5

65.9

64.3

64.4

1985

64.4

64.3

64.6

65.5

65.9

64.6

64.8

1986

64.6

64.6

65.0

66.3

66.6

65.0

65.3

1987

65.0

64.9

65.6

66.3

66.8

65.5

65.6

1988

65.2

65.3

65.5

66.7

67.1

65.9

65.9

1989

65.7

65.9

66.2

67.4

67.7

66.3

66.5

1990

66.2

66.1

66.5

67.4

67.7

66.1

66.5

1991

65.9

66.0

66.0

67.2

67.3

65.8

66.2

1992

66.0

66.0

66.4

67.6

67.9

66.1

66.4

1993

65.8

65.6

66.3

67.3

67.5

66.2

66.3

1994

66.1

66.0

66.5

67.2

67.5

66.5

66.6

1995

66.4

66.4

66.4

67.2

67.7

66.2

66.6

1996

66.4

66.2

66.7

67.4

67.9

66.7

66.8

1997

66.9

66.7

67.0

67.8

68.1

67.0

67.1

1998

67.0

66.6

67.0

67.7

67.9

67.0

67.1

1999

66.9

66.7

67.0

67.7

67.9

67.0

67.1

2000

67.1

67.0

67.0

67.7

67.6

67.0

67.1

2001

67.0

66.7

66.6

67.2

67.4

66.6

66.8

2002

66.6

66.4

66.5

67.1

67.2

66.2

66.6

2003

66.2

66.2

66.2

67.0

66.8

65.8

66.2

2004

65.8

65.7

65.8

66.5

66.8

65.8

66.0

2005

65.6

65.8

66.0

66.5

66.8

65.9

66.0

2006

65.8

65.8

66.0

66.7

66.9

66.3

66.2

2007

65.9

65.7

65.8

66.6

66.8

65.9

66.0

2008

65.7

65.7

66.0

66.6

66.8

65.7

66.0

2009

65.4

65.4

65.5

66.2

66.2

64.4

65.4

2010

64.8

64.9

64.8

65.1

65.3

64.1

64.7

2011

64.0

63.9

64.1

64.5

64.6

63.8

64.1

2012

63.6

63.4

63.8

64.3

64.3

63.4

63.7

2013

63.1

63.1

63.5

64.0

64.0

62.6

63.2

2014

62.9

62.6

62.9

63.4

63.5

62.5

62.9

2015

62.5

62.6

63.0

63.1

63.2

62.4

62.7

2016

62.8

62.7

62.7

63.2

63.4

62.4

62.8

2017

62.9

62.8

62.8

63.3

63.5

62.4

62.9

2018

62.8

62.7

62.8

63.4

63.5

62.8

62.9

2019

63.0

62.7

62.8

63.4

63.6

63.0

63.1

2020

62.6

60.0

60.7

61.8

62.0

61.3

61.7

2021

61.5

61.4

61.5

62.1

62.3

61.7

61.7

2022

62.4

62.0

62.3

62.5

62.6

    

Source: US Bureau of Labor Statistics

https://www.bls.gov/cps/

clip_image031

Chart I-12b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2022

Source: Bureau of Labor Statistics

https://www.bls.gov/data/

Broader perspective is in Chart I-12c of the US Bureau of Labor Statistics. The United States civilian noninstitutional population has increased along a consistent trend since 1948 that continued through earlier recessions and the global recession from IVQ2007 to IIQ2009 and the cyclical expansion after IIIQ2009.

clip_image032

Chart I-12c, US, Civilian Noninstitutional Population, Thousands, NSA, 1948-2022

Sources: US Bureau of Labor Statistics

https://www.bls.gov/data/

The labor force of the United States in Chart I-12d has increased along a trend similar to that of the civilian noninstitutional population in Chart I-12c. There is an evident stagnation of the civilian labor force in the final segment of Chart I-12d during the current economic cycle, with growth below historical trend. This stagnation is explained by cyclical factors similar to those analyzed by Lazear and Spletzer (2012JHJul22) that motivated an increasing population to drop out of the labor force instead of structural factors. Large segments of the potential labor force are not observed, constituting unobserved unemployment and of more permanent nature because those afflicted have been seriously discouraged from working by the lack of opportunities.

clip_image033

Chart I-12d, US, Labor Force, Thousands, NSA, 1948-2022

Sources: US Bureau of Labor Statistics

https://www.bls.gov/data/

The rate of labor force participation in the US is in Chart I-12E from 1948 to 2022. There is sudden decline during the global recession after 2007 without recovery explained by cyclical factors (Lazear and Spletzer2012JHJul22) as many potential workers stopped their searches disillusioned that there could be an opportunity for them in sharply contracted markets.

clip_image034

Chart I-12E, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1948-2022

Sources: US Bureau of Labor Statistics

https://www.bls.gov/data/

IA4 Job Creation. What is striking about the data in Table I-8 is that the numbers of monthly increases in jobs in 1983 and 1985 are several times higher than in 2010 to 2019. The civilian noninstitutional population grew by 48.8 percent from 174.215 million in 1983 to 259.175 million in 2019 and labor force higher by 46.6 percent, growing from 111.550 million in 1983 to 163.539 million in 2019. The civilian noninstitutional population increased from 259.175 million in 2019 to 261.445 million in 2021 and the labor force decreased from 163.539 million in 2019 to 161.204 million in 2021. Total nonfarm payroll employment seasonally adjusted (SA) increased 572 thousand in Jul 2022 and private payroll employment increased 471 thousand. The Bureau of Labor Statistics states (https://www.bls.gov/news.release/empsit.nr0.htm): “Our analysis suggests that the net effect of these hurricanes [Harvey and Irma] was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures.” A hurdle in analyzing the labor market is the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). Nonfarm jobs seasonally adjusted increased from 139,048 thousand in Jul 2020 to 146,387 thousand in Jul 2021 and increased to 152,536 thousand in Jul 2022. Private jobs seasonally adjusted increased from 117,537 thousand in Jul 2020 to 124,311 thousand in Jul 2021, increasing to 130,254 thousand in Jul 2022. This situation will continue to challenge measurement (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm) and the return to fuller employment is unpredictable.

Closing the economy to mitigate the infection of COVID-19 could deepen the global recession. Gradual reopening in May-2020 to Jul 2022 is recovering jobs. The number employed in Jul 2022 was 159.067 million (NSA) or 11.752 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 264.012 million in Jul 2022 or by 32.054 million. The number employed increased 8.0 percent from Jul 2007 to Jul 2022 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 13.8 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Jul 2022 would result in 167.647 million jobs (0.635 multiplied by noninstitutional civilian population of 264.012 million). There are effectively 8.580 million fewer jobs in Jun 2022 than in Jul 2007, or 167.647 million minus 159.067 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.0 percent on average in the cyclical expansion in the 52 quarters from IIIQ2009 to IIQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the first estimate of GDP for IIQ2022 (https://www.bea.gov/sites/default/files/2022-07/gdp2q22_adv.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%] or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995, 3.6 percent from IQ1983 to IIQ1995, 3.6 percent from IQ1983 to IIIQ1995, 3.6 percent from IQ1982 to IVQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 53.5 percent. GDP in IIQ2022 would be $24,204.2 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4522.5 billion than actual $19,681.7 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 21.4 million unemployed or underemployed equivalent to actual unemployment/underemployment of 12.2 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (Section I and earlier https://cmpassocregulationblog.blogspot.com/2022/07/increase-in-jun-2022-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). US GDP in IIQ2022 is 18.7 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,681.7 billion in IIQ2022 or 24.8 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Jul 1919 to Jul 2022. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.7546 in Dec 2007 to 161.9734 in Jul 2022. The actual index NSA in Jul 2022 is 101.0232 which is 37.6 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing output grew at average 1.4 percent between Dec 1999 and Dec 2006. Using trend growth of 1.4 percent per year, the index would increase to 130.7495 in Jul 2022. The output of manufacturing at 101.0232 in Jul 2022 is 22.7 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.4159 in Jul 2007 to the low of 84.7149 in Jun 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7149 in Apr 2009 to 101.2764 in Jul 2022 or 19.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6406 in Dec 2007 to 172.8144 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 41.4 percent below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6406 in Dec 2007 to 133.8024 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 24.3 percent below trend under this alternative calculation.

Table I-8, US, Monthly Change in Jobs, Number SA

Month

1981

1982

1983

2008

2009

2010

Private

Jan

90

-330

219

11

-784

2

-7

Feb

72

-2

-73

-79

-743

-92

-77

Mar

105

-129

173

-49

-800

181

139

Apr

73

-284

274

-240

-695

231

180

May

13

-43

280

-177

-342

540

113

Jun

194

-242

377

-171

-467

-139

117

Jul

111

-344

416

-196

-340

-84

87

Aug

-36

-158

-308

-278

-183

-5

144

Sep

-88

-180

1118

-460

-241

-65

108

Oct

-97

-276

273

-481

-199

268

218

Nov

-209

-121

355

-727

12

125

135

Dec

-276

-15

355

-706

-269

72

93
     

1984

    

2011

Private

Jan

    

443

    

19

27

Feb

    

484

    

212

255

Mar

    

272

    

235

258

Apr

    

363

    

314

322

May

    

306

    

101

156

Jun

    

381

    

236

201

Jul

    

310

    

60

175

Aug

    

243

    

126

158

Sep

    

312

    

233

267

Oct

    

285

    

204

189

Nov

    

353

    

132

159

Dec

    

125

    

202

219
     

1985

    

2012

Private

Jan

    

265

    

354

362

Feb

    

131

    

262

261

Mar

    

339

    

240

244

Apr

    

196

    

82

94

May

    

274

    

100

120

Jun

    

147

    

73

54

Jul

    

189

    

152

169

Aug

    

192

    

172

169

Sep

    

205

    

187

178

Oct

    

188

    

159

181

Nov

    

210

    

156

176

Dec

    

166

    

239

235
     

1986

    

2013

Private

Jan

    

123

    

191

209

Feb

    

115

    

278

266

Mar

    

87

    

139

150

Apr

    

187

    

191

192

May

    

127

    

222

227

Jun

    

-93

    

181

205

Jul

    

318

    

112

137

Aug

    

115

    

242

226

Sep

    

346

    

187

183

Oct

    

187

    

225

230

Nov

    

187

    

264

251

Dec

    

201

    

69

92
     

1987

    

2014

Private

Jan

    

169

    

175

181

Feb

    

241

    

166

155

Mar

    

245

    

254

246

Apr

    

335

    

325

305

May

    

229

    

218

239

Jun

    

172

    

326

263

Jul

    

347

    

232

226

Aug

    

173

    

188

234

Sep

    

227

    

309

267

Oct

    

491

    

252

232

Nov

    

234

    

291

276

Dec

    

289

    

268

253
     

1988

    

2015

Private

Jan

    

92

    

191

178

Feb

    

461

    

271

253

Mar

    

275

    

71

79

Apr

    

243

    

284

249

May

    

230

    

331

324

Jun

    

364

    

174

171

Jul

    

224

    

302

267

Aug

    

124

    

125

115

Sep

    

339

    

155

175

Oct

    

263

    

306

290

Nov

    

341

    

237

212

Dec

    

281

    

273

257
     

1989

    

2016

Private

Jan

    

263

    

108

91

Feb

    

266

    

212

188

Mar

    

194

    

237

197

Apr

    

170

    

197

191

May

    

122

    

41

26

Jun

    

114

    

258

277

Jul

    

42

    

371

262

Aug

    

51

    

143

148

Sep

    

249

    

289

250

Oct

    

107

    

118

146

Nov

    

276

    

130

148

Dec

    

84

    

214

187
     

1990

    

2017

Private

Jan

    

363

    

213

201

Feb

    

236

    

190

180

Mar

    

209

    

142

139

Apr

    

42

    

205

199

May

    

153

    

223

211

Jun

    

17

    

197

184

Jul

    

-32

    

183

169

Aug

    

-208

    

145

209

Sep

    

-98

    

99

76

Oct

    

-151

    

141

113

Nov

    

-153

    

200

182

Dec

    

-48

    

176

171
     

1991

    

2018

Private

Jan

    

-111

    

133

149

Feb

    

-321

    

402

360

Mar

    

-160

    

225

214

Apr

    

-210

    

179

165

May

    

-115

    

333

309

Jun

    

85

    

183

165

Jul

    

-42

    

66

94

Aug

    

18

    

219

199

Sep

    

26

    

57

42

Oct

    

21

    

145

146

Nov

    

-61

    

102

112

Dec

    

32

    

248

212
     

1992

    

2019

Private

Jan

    

41

    

279

269

Feb

    

-58

    

24

14

Mar

    

54

    

224

192

Apr

    

154

    

288

250

May

    

130

    

77

80

Jun

    

66

    

130

129

Jul

    

78

    

78

118

Aug

    

132

    

160

118

Sep

    

34

    

163

107

Oct

    

180

    

93

68

Nov

    

133

    

252

218

Dec

    

223

    

200

183
     

1993

    

2020

Jan

    

299

    

339

286

Feb

    

250

    

376

281

Mar

    

-50

    

-1498

-1444

Apr

    

302

    

-20493

-19572

May

    

272

    

2642

3125

Jun

    

181

    

4505

4510

Jul

    

306

    

1388

1293

Aug

    

151

    

1665

1213

Sep

    

242

    

919

959

Oct

    

285

    

647

799

Nov

    

251

    

333

406

Dec

    

330

    

-115

-108
     

1994

    

2021

Jan

    

281

    

520

423

Feb

    

186

    

710

693

Mar

    

461

    

704

650

Apr

    

344

    

263

212

May

    

335

    

447

381

Jun

    

317

    

557

508

Jul

    

372

    

689

638

Aug

    

286

    

517

497

Sep

    

351

    

424

409

Oct

    

211

    

677

694

Nov

    

411

    

647

627

Dec

    

296

    

588

561
     

1995

    

2022

Jan

    

336

    

504

492

Feb

    

196

    

714

704

Mar

    

210

    

398

385

Apr

    

162

    

368

368

May

    

-20

    

386

331

Jun

    

237

    

398

404

Jul

    

94

    

572

471

Aug

    

254

    

Sep

    

241

    

Oct

    

156

    

Nov

    

144

    

Dec

    

145

    

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

Charts numbered from I-38 to I-41 from the database of the Bureau of Labor Statistics provide a comparison of payroll survey data for the contractions and expansions in the 1980s and after 2007. Chart I-38 provides total nonfarm payroll jobs from 2001 to 2022. The sharp decline in total nonfarm jobs during the contraction after 2007 has been followed by initial stagnation and then inadequate growth in 2012 and 2013-2020 while population growth continued. There is sharp contraction in the final segment in Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image035

Chart I-38, US, Total Nonfarm Payroll Jobs SA 2001-2022

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

Chart I-39 provides total nonfarm jobs SA from 1979 to 1995. Recovery is strong throughout the decade with the economy growing at trend over the entire economic cycle. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The third recession explains the decline of the curve in 1990 followed by incipient recovery.

clip_image036

Chart I-39, US, Total Nonfarm Payroll Jobs SA 1979-1995

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

Most job creation in the US is by the private sector. Chart I-40 shows the sharp destruction of private payroll jobs during the contraction after 2007. There has been growth after 2010 but insufficient to recover higher levels of employment, adjusting for population growth, prevailing before the contraction. At current rates, recovery of employment may spread over several years in contrast with past expansions of the business cycle in the US. There is sharp contraction in Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image037

Chart I-40, US, Total Private Payroll Jobs SA 2001-2022

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

In contrast, growth of private payroll jobs in the US recovered vigorously during the expansion in 1983 through 1985, as shown in Chart I-41. Rapid growth of creation of private jobs continued throughout the 1980s. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The third recession explains the decline of the curve in 1990 followed by recovery.

clip_image038

Chart I-41, US, Total Private Payroll Jobs SA 1979-1995

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

The NBER dates recessions in the US from peaks to troughs as: IQ80 to IIIQ80, IIIQ81 to IV82 and IVQ07 to IIQ09 (https://www.nber.org/cycles.html). Table I-12 provides total annual level nonfarm employment in the US for the 1980s and the 2000s, which is different from 12-month comparisons. Nonfarm jobs rose by 4.859 million from 1982 to 1984, or 5.4 percent, and continued rapid growth in the rest of the decade. In contrast, nonfarm jobs are down by 7.636 million in 2010 relative to 2007 and fell by 951,000 in 2010 relative to 2009 even after six quarters of GDP growth. Monetary and fiscal stimuli have failed in increasing growth to rates required for mitigating job stress. The initial growth impulse reflects a flatter growth curve in the current expansion. Nonfarm jobs declined from 137.981 million in 2007 to 136.364 million in 2013, by 1.617 million or 1.2 percent. Nonfarm jobs increased from 137.981 million in 2007 to 150.905 million in 2019, by 12.924 million or 9.4 percent. The US noninstitutional population or in condition to work increased from 231.867 million in 2007 to 259.175 million in 2019, by 27.308 million or 11.8 percent. The ratio of nonfarm jobs of 137.981 million in 2007 to the noninstitutional population of 231.867 was 59.5. Nonfarm jobs in 2019 corresponding to the ratio of 59.5 of nonfarm jobs/noninstitutional population would be 154.209 million (0.595x259.175). The difference between actual nonfarm jobs of 150.905 million in 2019 and nonfarm jobs of 154.209 million that are equivalent to 59.5 percent of the noninstitutional population as in 2007 is 3.304 million fewer jobs. The proper explanation for this loss of work opportunities is not in secular stagnation but in cyclically slow growth. The NBER dates recessions in the US from peaks to troughs as: IQ80 to IIIQ80, IIIQ81 to IV82 and IVQ07 to IIQ09 (https://www.nber.org/cycles.html). US economic growth has been at only 2.0 percent on average in the cyclical expansion in the 52 quarters from IIIQ2009 to IIQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the first estimate of GDP for IIQ2022 (https://www.bea.gov/sites/default/files/2022-07/gdp2q22_adv.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%] or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995, 3.6 percent from IQ1983 to IIQ1995, 3.6 percent from IQ1983 to IIIQ1995, 3.6 percent from IQ1982 to IVQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IQ2022 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 53.5 percent. GDP in IIQ2022 would be $24,204.2 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4522.5 billion than actual $19,681.7 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 21.4 million unemployed or underemployed equivalent to actual unemployment/underemployment of 12.2 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (Section I and earlier https://cmpassocregulationblog.blogspot.com/2022/07/increase-in-jun-2022-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). US GDP in IIQ2022 is 18.7 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,681.7 billion in IIQ2022 or 24.8 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Jul 1919 to Jul 2022. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.7546 in Dec 2007 to 161.9734 in Jul 2022. The actual index NSA in Jul 2022 is 101.0232 which is 37.6 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing output grew at average 1.4 percent between Dec 1999 and Dec 2006. Using trend growth of 1.4 percent per year, the index would increase to 130.7495 in Jul 2022. The output of manufacturing at 101.0232 in Jul 2022 is 22.7 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.4159 in Jul 2007 to the low of 84.7149 in Jun 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7149 in Apr 2009 to 101.2764 in Jul 2022 or 19.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6406 in Dec 2007 to 172.8144 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 41.4 percent below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6406 in Dec 2007 to 133.8024 in Jul 2022. The NAICS index at 101.2764 in Jul 2022 is 24.3 percent below trend under this alternative calculation.

Table I-12, US, Total Nonfarm Employment in Thousands

Year

Total Nonfarm

Year

Total Nonfarm

1980

90,533

2000

132,011

1981

91,297

2001

132,073

1982

89,689

2002

130,634

1983

90,295

2003

130,331

1984

94,548

2004

131,769

1985

97,532

2005

134,034

1986

99,500

2006

136,435

1987

102,116

2007

137,981

1988

105,378

2008

137,224

1989

108,051

2009

131,296

1990

109,526

2010

130,345

1991

108,425

2011

131,914

1992

108,799

2012

134,157

1993

110,931

2013

136,364

1994

114,393

2014

138,940

1995

117,400

2015

141,825

1996

119,828

2016

144,336

1997

122,941

2017

146,608

1998

126,146

2018

148,908

1999

129,228

2019

150,905
   

2020

142,185
   

2021

146,122

Source: US Bureau of Labor Statistics https://www.bls.gov/data

Chart I-43 provides annual nonfarm jobs from 2000 to 2019. Cyclically slow growth in the expansion since IIIQ2009 has not been sufficient to recover nonfarm jobs. Because of population growth, there are 3.304 million fewer nonfarm jobs in the US in 2019 than in 2007.

clip_image039

Chart I-43, US, Annual Nonfarm Jobs, NSA, Thousands, 2000-2019

Source: US Bureau of Labor Statistics https://www.bls.gov/data

Chart I-44 provides annual nonfarm jobs in the US from 1980 to 1999. Much more rapid cyclical growth as in other expansions historically allowed steady and rapid growth of nonfarm job opportunities even with similarly dynamic population growth.

clip_image040

Chart I-44, US, Annual Nonfarm Jobs, NSA, Thousands, 1980-1999

Source: US Bureau of Labor Statistics https://www.bls.gov/data

The highest average yearly percentage of unemployed to the labor force since 1940 was 14.6 percent in 1940 followed by 9.9 percent in 1941, 8.5 percent in 1975, 9.7 percent in 1982 and 9.6 percent in 1983 (ftp://ftp.bls.gov/pub/special.requests/lf/aa2006/pdf/cpsaat1.pdf). The rate of unemployment remained at high levels in the 1930s, rising from 3.2 percent in 1929 to 22.9 percent in 1932 in one estimate and 23.6 percent in another with real wages increasing by 16.4 percent (Margo 1993, 43; see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 214-5). There are alternative estimates of 17.2 percent or 9.5 percent for 1940 with real wages increasing by 44 percent. Employment declined sharply during the 1930s. The number of hours worked remained in 1939 at 29 percent below the level of 1929 (Cole and Ohanian 1999). Private hours worked fell in 1939 to 25 percent of the level in 1929. The policy of encouraging collusion through the National Industrial Recovery Act (NIRA), to maintain high prices, together with the National Labor Relations Act (NLRA), to maintain high wages, prevented the US economy from recovering employment levels until Roosevelt abandoned these policies toward the end of the 1930s (for review of the literature analyzing the Great Depression see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 198-217).

The Bureau of Labor Statistics (BLS) makes yearly revisions of its establishment survey (Harris 2011BA):

“With the release of data for January 2011, the Bureau of Labor Statistics (BLS) introduced its annual revision of national estimates of employment, hours, and earnings from the Current Employment Statistics (CES) monthly survey of nonfarm establishments.  Each year, the CES survey realigns its sample-based estimates to incorporate universe counts of employment—a process known as benchmarking.  Comprehensive counts of employment, or benchmarks, are derived primarily from unemployment insurance (UI) tax reports that nearly all employers are required to file with State Workforce Agencies.”

The number of not seasonally adjusted total private jobs in the US in Dec 2010 is 108.464 million, declining to 106.079 million in Jan 2011, or by 2.385 million, because of the adjustment of a different benchmark and not actual job losses. The not seasonally adjusted number of total private jobs in Dec 1984 is 80.250 million, declining to 78.704 million in Jan 1985, or by 1.546 million for the similar adjustment. Table I-13 attempts to measure job losses and gains in the recessions and expansions of 1981-1985 and 2007-2011. The final ten rows provide job creation from May 1983 to May 1984 and from May 2010 to May 2011, that is, at equivalent stages of the recovery from two comparable strong recessions. The row “Change ∆%” for May 1983 to May 1984 shows an increase of total nonfarm jobs by 4.9 percent and of 5.9 percent for total private jobs. The row “Change ∆%” for May 2010 to May 2011 shows an increase of total nonfarm jobs by 0.7 percent and of 1.7 percent for total private jobs. The last two rows of Table 7 provide a calculation of the number of jobs that would have been created from May 2010 to May 2011 if the rate of job creation had been the same as from May 1983 to May 1984. If total nonfarm jobs had grown between May 2010 and May 2011 by 4.9 percent, as between May 1983 and May 1984, 6.409 million jobs would have been created in the past 12 months for a difference of 5.457 million more total nonfarm jobs relative to 0.952 million jobs actually created. If total private jobs had grown between May 2010 and May 2011 by 5.9 percent as between May 1983 and May 1984, 6.337 million private jobs would have been created for a difference of 4.539 million more total private jobs relative to 1.798 million jobs actually created.

Table I-13, US, Total Nonfarm and Total Private Jobs Destroyed and Subsequently Created in Two Recessions IIIQ1981-IVQ1982 and IVQ2007-IIQ2009, Thousands and Percent

 

Total Nonfarm Jobs

Total Private Jobs

06/1981 #

92,288

75,969

11/1982 #

89,482

73,260

Change #

-2,806

-2,709

Change ∆%

-3.0

-3.6

12/1982 #

89,383

73,185

05/1984 #

94,471

78,049

Change #

5,088

4,864

Change ∆%

5.7

6.6

11/2007 #

139,090

116,291

05/2009 #

131,626

108,601

Change %

-7,464

-7,690

Change ∆%

-5.4

-6.6

12/2009 #

130,178

107,338

05/2011 #

131,753

108,494

Change #

1,575

1,156

Change ∆%

1.2

1.1

05/1983 #

90,005

73,667

05/1984 #

94,471

78,049

Change #

4,466

4,382

Change ∆%

4.9

5.9

05/2010 #

130,801

107,405

05/2011 #

131,753

109,203

Change #

952

1,798

Change ∆%

0.7

1.7

Change # by ∆% as in 05/1984 to 05/1985

6,409*

6,337**

Difference in Jobs that Would Have Been Created

5,457 =
6,409-952

4,539 =
6,337-1,798

*[(130,801x1.049)-130,801] = 6,409 thousand

**[(107,405)x1.059 – 107,405] = 6,337 thousand

Source: US Bureau of Labor Statistics http://www.bls.gov/data/

IB Stagnating Real Wages. The wage bill is the product of average weekly hours times the earnings per hour. Table IB-1 provides the estimates by the Bureau of Labor Statistics (BLS) of earnings per hour seasonally adjusted, increasing from $30.67/hour in Jul 2021 to $32.27/hour in Jul 2022, or by 5.2 percent. The Bureau of Labor Statistics states (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-january-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-february-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-march-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-april-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-may-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-june-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2021.htm https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm) “Similarly changes in average hourly earnings in recent months must be interpreted with caution. Average hourly earnings of all employees on private nonfarm payrolls declined by 35 cents in June to $29.37, following a decrease of 31 cents in May and a gain of $1.34 in April. The increase in average hourly earnings in April largely reflects the disproportionate number of lower-paid workers who went off payrolls, which put upward pressure on the total private average hourly earnings estimate. Some of these workers returned to payrolls in May and June, and job gains among lower-paid workers put downward pressure on average hourly earnings, though the effect is more muted given the smaller magnitude of employment changes in the past 2 months.” There has been disappointment about the pace of wage increases because of rising food and energy costs that inhibit consumption and thus sales and similar concern about growth of consumption that accounts for about 68.5 percent of GDP (https://apps.bea.gov/iTable/index_nipa.cfm). Growth of consumption by decreasing savings by means of controlling interest rates in what is called financial repression may not be lasting and sound for personal finances (See Pelaez and Pelaez, Globalization and the State, Vol. II (2008c), 81-6, Pelaez (1975), See https://cmpassocregulationblog.blogspot.com/2022/08/real-disposable-income-or-personal.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/consumer-prices-of-theunited-states.html and earlier https://cmpassocregulationblog.blogspot.com/2022/06/consumer-prices-of-theunited-states.html and earlier https://cmpassocregulationblog.blogspot.com/2022/04/increase-in-mar-2022-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2022/03/increase-in-feb-2022-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/increase-in-jan-2022-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/real-disposable-income-decreasing-02.html and earlier https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/09/increase-in-aug-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/08/increase-in-jul-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/07/increase-in-jun-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/06/increase-in-may-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/05/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/03/increase-in-feb-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/02/increasing-valuations-of-risks.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/recovering-gdp-of-major-world-economies.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/recovering-gdp-of-major-world-economies.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/dollar-devaluation-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/11/increase-in-oct-2020-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2020/10/increasingvaluations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/07/increase-of-total-nonfarm-payroll-jobs.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/creation-of-three-million-private.html and earlier https://cmpassocregulationblog.blogspot.com/2020/05/fifty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/04/lockdown-of-economic-activity-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/03/stress-of-world-financial-markets-fomc.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/01/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/12/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/11/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/10/volatility-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/dollar-appreciation-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/twenty-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/contraction-of-risk-financial-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/flattening-yield-curve-of-treasury.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/dollar-revaluation-twenty-one-million.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/mediocre-cyclical-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/fluctuations-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/fomc-increases-policy-interest-rate.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/revision-of-united-states-national.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/revision-of-united-states-national.html and earlier and earlier https://cmpassocregulationblog.blogspot.com/2018/07/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/stronger-dollar-mediocre-cyclical.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/04/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/fluctuating-financial-valuations.html http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/06/financial-instability-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.html

http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real.html http://cmpassocregulationblog.blogspot.com/2012/06/mediocre-recovery-without-jobs.html http://cmpassocregulationblog.blogspot.com/2012/04/mediocre-growth-with-high-unemployment.html http://cmpassocregulationblog.blogspot.com/2012/04/mediocre-economic-growth-falling-real.html http://cmpassocregulationblog.blogspot.com/2012/03/mediocre-economic-growth-flattening.html http://cmpassocregulationblog.blogspot.com/2012/01/mediocre-economic-growth-financial.html http://cmpassocregulationblog.blogspot.com/2011/12/slow-growth-falling-real-disposable.html http://cmpassocregulationblog.blogspot.com/2011/11/us-growth-standstill-falling-real.html http://cmpassocregulationblog.blogspot.com/2011/10/slow-growth-driven-by-reducing-savings.html). Average hourly earnings seasonally adjusted increased 0.5 percent from $32.12 in Jun 2022 to $32.27 in Jul 2022. The Bureau of Labor Statistics states (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-january-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-february-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-march-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-april-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-may-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-june-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2021.htm https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm): “Similarly, changes in average hourly earnings in recent months must be interpreted with caution. Average hourly earnings of all employees on private nonfarm payrolls declined by 35 cents in June to $29.37, following a decrease of 31 cents in May and a gain of $1.34 in April. The increase in average hourly earnings in April largely reflects the disproportionate number of lower-paid workers who went off payrolls, which put upward pressure on the total private average hourly earnings estimate. Some of these workers returned to payrolls in May and June, and job gains among lower-paid workers put downward pressure on average hourly earnings, though the effect is more muted given the smaller magnitude of employment changes in the past 2 months.” Average private weekly earnings increased $49.22 from $1,067.32 in Jul 2021 to $1,116.54 in Jul 2022 or 4.6 percent and increased $5.19 from $1,111.35 in Jun 2022 to $1,116.54 in Jul 2022 or 0.5 percent. The Bureau of Labor Statistics analyzes the increase in earnings (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-january-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-february-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-march-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-april-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-may-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-june-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-july-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-august-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-september-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm https://www.bls.gov/covid19/employment-situation-covid19-faq-december-2021.htm https://www.bls.gov/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm): “Similarly, changes in average hourly earnings in recent months must be interpreted with caution. Average hourly earnings of all employees on private nonfarm payrolls declined by 35 cents in June to $29.37, following a decrease of 31 cents in May and a gain of $1.34 in April. The increase in average hourly earnings in April largely reflects the disproportionate number of lower-paid workers who went off payrolls, which put upward pressure on the total private average hourly earnings estimate. Some of these workers returned to payrolls in May and June, and job gains among lower-paid workers put downward pressure on average hourly earnings, though the effect is more muted given the smaller magnitude of employment changes in the past 2 months.”

Table IB-1, US, Earnings per Hour and Average Weekly Hours SA

Earnings per Hour

Jul 2021

May 2022

Jun 2022

Jul 2022

Total Private

$30.67

$31.98

$32.12

$32.27

Goods Producing

$31.08

$32.30

$32.38

$32.49

Service Providing

$30.58

$31.90

$32.05

$32.22

Average Weekly Earnings

        

Total Private

$1,067.32

$1,106.51

$1,111.35

$1,116.54

Goods Producing

$1,243.20

$1,292.00

$1,291.96

$1,299.60

Service Providing

$1,033.60

$1,068.55

$1,073.68

$1,079.37

Average Weekly Hours

        

Total Private

34.8

34.6

34.6

34.6

Goods Producing

40.0

40.0

39.9

40.0

Service Providing

33.8

33.5

33.5

33.5

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Average weekly hours in Table IB-2 fell from 34.8 in Dec 2007 at the beginning of the contraction to 33.7 in Jun 2009, which was the last month of the contraction. Average weekly hours rose to 34.4 in Dec 2011 and oscillated to 34.8 in Dec 2012 and 34.7 in Dec 2013. Average weekly hours of all employees decreased to 34.6 in Dec 2014 and 34.5 in Dec 2015. Average weekly hours stood at 34.3 in Dec 2016. Average weekly hours reached 34.5 in Dec 2017, increasing to 34.9 in Dec 2018. Average weekly hours moved to 34.7 in Dec 2019, 34.8 in Dec 2020 and 34.8 in Dec 2021. Average weekly hours moved to 34.5 in Jul 2022. The BLS is revising the data from 2006 to 2009 (https://www.bls.gov/ces/#notices) now available in the release for Jan 2016 and subsequent months.

Table IB-2, US, Average Weekly Hours of All Employees, NSA 2006-2022

Year

Mar

Apr

May

Jun

Jul

Dec

Annual

2006

34.0

34.4

34.1

34.4

34.7

34.4

  

2007

34.2

34.5

34.3

34.5

34.8

34.8

34.4

2008

34.6

34.2

34.2

34.8

34.3

33.9

34.3

2009

33.9

33.5

33.6

33.7

33.8

33.8

33.8

2010

33.8

34.0

34.4

34.1

34.2

34.2

34.1

2011

34.1

34.2

34.6

34.3

34.4

34.4

34.3

2012

34.2

34.6

34.2

34.4

34.7

34.8

34.5

2013

34.3

34.3

34.3

34.9

34.3

34.7

34.4

2014

34.7

34.4

34.4

34.9

34.5

34.6

34.5

2015

34.7

34.4

34.4

34.5

34.5

34.5

34.5

2016

34.2

34.3

34.6

34.4

34.4

34.3

34.4

2017

34.1

34.6

34.3

34.4

34.8

34.5

34.4

2018

34.3

34.8

34.4

34.6

34.9

34.9

34.5

2019

34.3

34.3

34.3

34.9

34.3

34.7

34.4

2020

34.3

34.1

34.6

34.6

34.5

34.8

34.6

2021

34.7

34.8

35.2

34.8

34.7

34.8

34.7

2022

34.4

34.4

34.8

34.6

34.5

    

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart IB-1 provides average weekly hours of all employees seasonally adjusted. There was sharp contraction during the global recession. Hours returned to levels before and above the contraction.

clip_image041

Chart IB-1, US, Average Weekly Hours of All Employees, SA 2006-2022

Source: US Bureau of Labor Statistics

https://www.bls.gov/data

Calculations of inflation adjusted real weekly earnings by the BLS are in Table IB-5. Average weekly earnings fell 3.2 percent after adjusting for inflation in the 12 months ending in Aug 2011, decreased 1.2 percent in the 12 months ending in Sep 2011 and increased 0.6 percent in the 12 months ending in Oct 2011. Average weekly earnings fell 1.1 percent in the 12 months ending in Nov 2011 and fell 0.4 percent in the 12 months ending in Dec 2011. Average weekly earnings declined 0.3 percent in the 12 months ending in Jan 2012 and fell 0.5 percent in the 12 months ending in Feb 2012. Average weekly earnings in constant dollars were virtually flat in Mar 2012 relative to Mar 2011, decreasing 0.2 percent. Average weekly earnings in constant dollars increased 1.7 percent in Apr 2012 relative to Apr 2011 but fell 1.7 percent in May 2012 relative to May 2011, increasing 0.6 percent in the 12 months ending in Jun 2012 and 1.8 percent in the 12 months ending in Jul 2012. Real weekly earnings increased 0.4 percent in the 12 months ending in Aug 2012 and 2.2 percent in the 12 months ending in Sep 2012. Real weekly earnings fell 2.6 percent in the 12 months ending in Oct 2012 and increased 0.1 percent in the 12 months ending in Nov 2012 and 2.2 percent in the 12 months ending in Dec 2012. Real weekly earnings fell 1.7 percent in the 12 months ending in Jan 2013 and virtually stagnated with gain of 0.2 percent in the 12 months ending in Feb 2013, increasing 0.8 percent in the 12 months ending in Mar 2013. Real weekly earnings fell 0.6 percent in the 12 months ending in Apr 2013 and increased 0.9 percent in the 12 months ending in May 2013. Average weekly earnings increased 2.5 percent in the 12 months ending in Jun 2013 and fell 1.7 percent in the 12 months ending in Jul 2013. Real weekly earnings increased 0.7 percent in the 12 months ending in Aug 2013, 1.2 percent in the 12 months ending in Sep 2013 and 1.6 percent in the 12 months ending in Oct 2013. Average weekly earnings increased 1.3 percent in the 12 months ending in Nov 2013 and increased 0.1 percent in the 12 months ending in Dec 2013. Average weekly earnings increased 0.4 percent in the 12 months ending in Jan 2014 and 2.3 percent in the 12 months ending in Feb 2014. Average weekly earnings increased 2.4 percent in the 12 months ending in Mar 2014 and 0.3 percent in the 12 months ending in Apr 2014. Average weekly earnings in constant dollars increased 0.3 percent in the 12 months ending in May 2014 and changed 0.0 percent in the 12 months ending in Jun 2014. Real average weekly earnings increased 0.7 percent in the 12 months ending in Jul 2014 and 0.8 percent in the 12 months ending in Aug 2014. Real weekly earnings decreased 1.4 percent in the 12 months ending in Sep 2014 and increased 0.6 percent in the 12 months ending in Oct 2014. Average weekly earnings increased 2.9 percent in the 12 months ending in Nov 2014 and increased 0.1 percent in the 12 months ending in Dec 2014. Average weekly earnings increased 2.9 percent in the 12 months ending in Jan 2015 and increased 2.5 percent in the 12 months ending in Feb 2015. Average weekly earnings adjusted for inflation increased 2.3 percent in the 12 months ending in Mar 2015 and increased 2.4 percent in the 12 months ending in Apr 2015. Average weekly earnings adjusted for inflation increased 2.4 percent in the 12 months ending in May 2015 and increased 0.1 percent in the 12 months ending in Jun 2015. Average weekly earnings increased 2.0 percent in the 12 months ending in Jul 2015 and 4.2 percent in the 12 months ending in Aug 2015. Average weekly earnings adjusted for inflation increased 1.7 percent in the 12 months ending in Sep 2015 and increased 2.4 percent in the 12 months ending in Oct 2015. Average weekly earnings adjusted for inflation increased 1.6 percent in the 12 months ending in Nov 2015 and increased 1.5 percent in the 12 months ending in Dec 2015. Average weekly earnings increased 1.1 percent in the 12 months ending in Jan 2016. Average weekly earnings contracted 0.8 percent in the 12 months ending in Feb 2015 and contracted 0.5 percent in the 12 months ending in Mar 2016. Average weekly earnings increased 1.2 percent in the 12 months ending in Apr 2016 and increased 2.7 percent in the 12 months ending in May 2016. Average weekly earnings increased 1.3 percent in the 12 months ending in Jun 2016 and increased 1.6 percent in the 12 months ending in Jul 2016. Average weekly earnings decreased 1.2 percent in the 12 months ending in Aug 2016 and increased 1.5 percent in the 12 months ending in Sep 2016. Average weekly earnings increased 2.7 percent in the 12 months ending in Oct 2016 and decreased 1.3 percent in the 12 months ending in Nov 2016. Average weekly earnings changed 0.0 percent in the 12 months ending in Dec 2016 and increased 1.2 percent in the 12 months ending in Jan 2017. Average weekly earnings changed 0.0 percent in the 12 months ending in Feb 2017. Average weekly earnings decreased 0.1 percent in the 12 months ending in Mar 2017 and increased 1.9 percent in the 12 months ending in Apr 2017. Average weekly earnings decreased 0.9 percent in the 12 months ending in May 2017 and increased 0.8 percent in the 12 months ending in Jun 2017. Average weekly earnings increased 2.7 percent in the 12 months ending in Jul 2017 and increased 0.7 percent in the 12 months ending in Aug 2017. Average weekly earnings increased 0.3 percent in the 12 months ending in Sep 2017 and increased 0.3 percent in the 12 months ending in Oct 2017. Average weekly earnings increased 0.5 percent in the 12 months ending in Nov 2017. Average weekly earnings increased 1.2 percent in the 12 months ending in Dec 2017. Average weekly earnings decreased 1.1 percent in the 12 months ending in Jan 2018 and increased 0.9 percent in the 12 months ending in Feb 2018. Average weekly earnings increased 1.0 percent in the 12 months ending in Mar 2018 and increased 0.9 percent in the 12 months ending in Apr 2018. Average weekly earnings increased 0.4 percent in the 12 months ending in May 2018 and increased 0.6 percent in the 12 months ending in Jun 2018. Average weekly earnings increased 0.2 percent in the 12 months ending in Jul 2018. Average weekly earnings increased 1.0 percent in the 12 months ending in Aug 2018. Average weekly earnings increased 2.9 percent in the 12 months ending in Sep 2018 and decreased 1.1 percent in the 12 months ending in Oct 2018. Average weekly earnings increased 1.1 percent in the 12 months ending in Nov 2018. Average weekly earnings increased 3.4 percent in the 12 months ending in Dec 2018. Average weekly earnings increased 1.9 percent in the 12 months ending in Jan 2019 and increased 1.4 percent in the 12 months ending in Feb 2019. Average weekly earnings increased 1.5 percent in the 12 months ending in Mar 2019. Average weekly earnings decreased 0.9 percent in the 12 months ending in Apr 2019. Average weekly earnings increased 1.2 percent in the 12 months ending in May 2019 and increased 3.3 percent in the 12 months ending in Jun 2019. Average weekly earnings decreased 0.8 percent in the 12 months ending in Jul 2019. Average weekly earnings increased 1.4 percent in the 12 months ending in Aug 2019 and increased 1.4 percent in the 12 months ending in Sep 2019. Average weekly earnings increased 1.1 percent in the 12 months ending in Oct 2019. Average weekly earnings increased 0.7 percent in the 12 months ending in Nov 2019. Average weekly earnings increased 0.1 percent in the 12 months ending in Dec 2019. Average weekly earnings decreased 0.1 percent in the 12 months ending in Jan 2020. Average weekly earnings increased 2.2 percent in the 12 months ending in Feb 2020. Average weekly earnings increased 2.5 percent in the 12 months ending in Mar 2020. Average weekly earnings increased 7.1 percent in the 12 months ending in Apr 2020. Average weekly earnings increased 7.5 percent in the 12 months ending in May 2020. Average weekly earnings increased 2.8 percent in the 12 months ending in Jun 2020. Average weekly earnings increased 4.5 percent in the 12 months ending in Jul 2020. Average weekly earnings increased 6.1 percent in the 12 months ending in Aug 2020. Average weekly earnings increased 1.8 percent in the 12 months ending in Sep 2020. Average weekly earnings increased 4.8 percent in the 12 months ending in Oct 2020. Average weekly earnings increased 6.8 percent in the 12 months ending in Nov 2020. Average weekly earnings increased 3.6 percent in the 12 months ending in Dec 2020. Average weekly earnings increased 5.9 percent in the 12 months ending in Jan 2021. Average weekly earnings increased 2.6 percent in the 12 months ending in Feb 2021. Average weekly earnings increased 2.4 percent in the 12 months ending in Mar 2021. Average weekly earnings decreased 1.4 percent in the 12 months ending in Apr 2021. Average weekly earnings decreased 0.2 percent in the 12 months ending in May 2021. Average weekly earnings decreased 0.8 percent in the 12 months ending in Jun 2021. Average weekly earnings decreased 0.4 percent in the 12 months ending in Jul 2021. Average weekly earnings decreased 0.9 percent in the 12 months ending in Aug 2021. Average weekly earnings decreased 0.5 percent in the 12 months ending in Sep 2021. Average weekly earnings decreased 1.0 percent in the 12 months ending in Oct 2017. Average weekly earnings decreased 3.3 percent in the 12 months ending in Nov 2021. Average weekly earnings decreased 2.0 percent in the 12 months ending in Dec 2021. Average weekly earnings decreased 1.5 percent in the 12 months ending in Jan 2022. Average weekly earnings decreased 1.9 percent in the 12 months ending in Feb 2022. Average weekly earnings decreased 3.5 percent in the 12 months ending in Mar 2022. Average weekly earnings fell 3.7 percent in the 12 months ending in Apr 2022. Average weekly earnings decreased 4.1 percent in the 12 months ending in May 2022. Average weekly earnings decreased 4.1 percent in the 12 months ending in Jun 2022. Average weekly earnings decreased 3.5 percent in the 12 months ending in Jul 2022, Table I-5 confirms the trend of deterioration of purchasing power of average weekly earnings in 2011 and into 2013 with oscillations according to carry trades causing world inflation waves (https://cmpassocregulationblog.blogspot.com/2022/03/accelerating-inflation-throughout-world.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html). On an annual basis, average weekly earnings in constant 1982-1984 dollars increased from $347.13 in 2007 to $354.10 in 2013, by 2.0 percent or at the average rate of 0.3 percent per year (data in http://www.bls.gov/data/). Annual average weekly earnings in constant dollars of $352.92 in 2010 fell 0.4 percent to $351.52 in 2011. Annual average weekly earnings increased from $347.13 in 2007 to $356.85 in 2014 or by 2.8 at the average rate of 0.4 percent. Annual average weekly earnings in constant dollars increased from $347.13 in 2007 to $364.56 in 2015 by 5.0 percent at the average rate of 0.6 percent per year. Annual average weekly earnings in constant dollar increased from $347.13 in 2007 to $367.11 in 2016 by 5.8 percent at the average rate of 0.6 percent per year. Average weekly earnings in constant dollars increased from $347.13 in 2007 to $369.69 in 2017 by 6.5 percent at the average rate of 0.6 percent per year. Average weekly earnings in constant dollars increased from $347.13 in 2007 to $372.90 in 2018 by 7.4 percent at the average rate of 0.7 percent per year. Average weekly earnings in constant dollars increased from $347.13 in 2007 to $376.70 in 2019 by 8.5 percent at the average rate of 0.7 percent per year. Those who still work bring back home a paycheck that buys fewer high-quality goods than a year earlier. Average weekly earnings increased from $376.70 in 2019 to $391.94 in 2020 by 4.0 percent and increased 0.1 percent from $391.94 in 2020 to $392.17 in 2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The fractured US job market does not provide an opportunity for advancement as in past booms following recessions because of poor job creation with 21.4 million unemployed or underemployed (Section I and earlier https://cmpassocregulationblog.blogspot.com/2022/07/increase-in-jun-2022-of-nonfarm-payroll.html) because of mediocre economic growth (https://cmpassocregulationblog.blogspot.com/2022/08/the-consumer-price-index-of-united.html and earlier https://cmpassocregulationblog.blogspot.com/2022/07/us-gdp-contracting-at-saar-of-16.html). The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available for the release of Jan 2016 and subsequent releases.

Table IB-5, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, NSA 2006-2022

Year

May

Jun

Jul

Dec

2006

337.80

339.76

345.81

351.16

2007

342.59

343.92

349.84

352.91

2008

337.84

341.61

334.32

354.11

2009

346.28

342.95

345.30

350.29

2010

356.33

349.50

351.55

355.14

2011

352.95

346.61

349.30

353.80

2012

347.04

348.68

355.63

361.49

∆%12M

-1.7

0.6

1.8

2.2

2013

350.30

357.51

349.47

361.82

∆%12M

0.9

2.5

-1.7

0.1

2014

351.37

357.58

351.88

362.19

∆%12M

0.3

0.0

0.7

0.1

2015

359.90

357.96

358.95

367.57

∆%12M

2.4

0.1

2.0

1.5

2016

369.72

362.67

364.83

367.53

∆%12M

2.7

1.3

1.6

0.0

2017

366.22

365.55

374.60

371.98

∆%12M

-0.9

0.8

2.7

1.2

2018

367.81

367.85

375.30

384.65

∆%12M

0.4

0.6

0.2

3.4

2019

372.07

380.14

372.45

384.98

∆%12M

1.2

3.3

-0.8

0.1

2020

399.99

390.70

389.07

398.67

∆%12M

7.5

2.8

4.5

3.6

2021

399.08

387.71

387.42

390.56

∆%12M

-0.2

-0.8

-0.4

-2.0

2022

382.53

371.91

373.91

  

∆%12M

-4.1

-4.1

-3.5

  

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart IB-4 provides average weekly earnings in constant dollars of 1982-1984 from 2006 to 2022. The same pattern emerges of sharp decline during the contraction, followed by recovery in the expansion and continuing fall with oscillations caused by carry trades from zero interest rates into commodity futures from 2010 to 2011 and into 2012-2020. The increase in the final segment is mostly because of collapse of commodity prices in reversals of carry trade exposures followed by reversal of carry trades and new decreases/stability. The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) available for the release of Jan 2016 and subsequent releases. There is risk of continuing high inflation.

clip_image042

Chart IB-4, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data

Chart IB-5 provides 12-month percentage changes of average weekly earnings of all employees in the US in constant dollars of 1982-1984. The BLS is revising the data from 2006 to 2009 (https://www.bls.gov/ces/#notices) available for the release of Jan 2016 and subsequent releases. There is the same pattern of contraction during the global recession in 2008 and then again weakness in the recovery without hiring and inflation waves https://cmpassocregulationblog.blogspot.com/2022/03/accelerating-inflation-throughout-world.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/real-disposable-income-decreasing-02.html https://cmpassocregulationblog.blogspot.com/2021/11/us-gdp-growing-at-21-saar-in-iiiq2021.html https://cmpassocregulationblog.blogspot.com/2021/10/cumulative-growth-of-us-manufacturing.html https://cmpassocregulationblog.blogspot.com/2021/09/world-inflation-waves-high-inflation.html https://cmpassocregulationblog.blogspot.com/2021/08/cumulative-growth-of-us-manufacturing.html https://cmpassocregulationblog.blogspot.com/2021/08/us-gdp-growing-at-66-saar-in-iiq2021-in.html https://cmpassocregulationblog.blogspot.com/2021/07/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/06/us-gdp-growing-continuing-recovery-in.html and earlier https://cmpassocregulationblog.blogspot.com/2021/05/us-gdp-growing-at-saar-64-percent-in_29.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/rising-inflation-world-inflation-waves.html and earlier https://cmpassocregulationblog.blogspot.com/2021/03/us-gdp-growing-at-saar-43-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2021/02/us-gdp-growing-at-saar-41-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/us-gdp-growing-at-saar-40-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/us-gdp-growing-at-saar-334-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/us-gdp-growing-at-saar-334-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/11/dollar-devaluation-increasing.html and earlier lhttps://cmpassocregulationblog.blogspot.com/2020/11/us-gdp-growing-at-saar-331-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/09/wealth-of-households-and-nonprofit.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/07/contraction-of-household-wealth-by-14.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/mediocre-cyclical-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/recovery-in-jun-2020-of-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/05/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2020/04/valuations-of-risk-financial-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2020/03/weekly-rise-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/sharp-worldwide-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/decreasing-valuations-of-risk-financial.html https://cmpassocregulationblog.blogspot.com/2019/12/diverging-economic-conditions-and.html and earlier https://cmpassocregulationblog.blogspot.com/2019/11/oscillating-risk-financial-assets-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/10/dollar-depreciation-fluctuating.html and earlier https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/contraction-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/global-manufacturing-stress-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/fomc-outlook-uncertainty-central-bank.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/contraction-of-risk-financial-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/inverted-yield-curve-of-treasury.html and https://cmpassocregulationblog.blogspot.com/2019/02/revaluation-of-yuanus-dollar-exchange.html earlier https://cmpassocregulationblog.blogspot.com/2019/01/world-inflation-waves-world-financial_24.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/increase-of-interest-rates-by-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/weakening-gdp-growth-in-major-economies.html and earlier https://cmpassocregulationblog.blogspot.com/2018/10/oscillation-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/world-inflation-waves-lost-economic.html https://cmpassocregulationblog.blogspot.com/2018/07/continuing-gradual-increases-in-fed.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/dollar-strengthening-world-inflation.htm and earlier https://cmpassocregulationblog.blogspot.com/2018/04/rising-yields-world-inflation-waves.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier 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http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html http://cmpassocregulationblog.blogspot.com/2013/10/world-inflation-waves-regional-economic.html http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html http://cmpassocregulationblog.blogspot.com/2013/07/tapering-quantitative-easing-policy-and.html

http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and.html http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2013/04/recovery-without-hiring-ten-million.html http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html http://cmpassocregulationblog.blogspot.com/2012_09_01_archive.html http://cmpassocregulationblog.blogspot.com/2012/07/world-inflation-waves-financial.html http://cmpassocregulationblog.blogspot.com/2012/06/destruction-of-three-trillion-dollars.html http://cmpassocregulationblog.blogspot.com/2012/05/world-inflation-waves-monetary-policy.html http://cmpassocregulationblog.blogspot.com/2012/06/recovery-without-hiring-continuance-of.html http://cmpassocregulationblog.blogspot.com/2012/04/fractured-labor-market-with-hiring.html http://cmpassocregulationblog.blogspot.com/2012/03/global-financial-and-economic-risk.html http://cmpassocregulationblog.blogspot.com/2012/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/recovery-without-hiring-united-states.html

http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html http://cmpassocregulationblog.blogspot.com/2012_09_01_archive.html http://cmpassocregulationblog.blogspot.com/2012/07/world-inflation-waves-financial.html http://cmpassocregulationblog.blogspot.com/2012/05/world-inflation-waves-monetary-policy.html http://cmpassocregulationblog.blogspot.com/2012/06/recovery-without-hiring-continuance-of.html http://cmpassocregulationblog.blogspot.com/2012/04/fractured-labor-market-with-hiring.html http://cmpassocregulationblog.blogspot.com/2012/03/global-financial-and-economic-risk.html http://cmpassocregulationblog.blogspot.com/2012/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/recovery-without-hiring-united-states.html).

clip_image043

Chart IB-5, US, Average Weekly Earnings of All Employees NSA in Constant Dollars of 1982-1984 12-Month Percent Change, NSA 2007-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/data

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022.

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